38404 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Issues and Good Practice © 2006 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org/rural E-mail ard@worldbank.org All rights reserved. The findings, interpretations, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Board of Executive Directors of the World Bank, the governments they represent, or of any other organization. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is copyrighted. 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Contents ACKNOWLEDGMENTS v ACRONYMS AND ABBREVIATIONS vii EXECUTIVE SUMMARY ix Introduction 1 1 Objectives of the Report and of Compensation 1 Background and Rationale for Assessing Good Practices 3 Context in Which Compensation Occurs 4 Approach to Ascertaining Good Practice 4 Deciding Who to Compensate: The Beneficiaries 7 2 Who Has Been Compensated in Control of Animal Diseases Other Than HPAI? 7 Who Is Involved in Poultry Production? 7 Ensuring That Eligible People Are Included 9 Establishing Losses 13 3 Direct, Consequential, and Indirect Losses 13 Types of Losses That Compensation Schemes Typically Take into Account 14 Losses Covered by Private Insurance or Public-Private Partnership in Developed Countries 16 Setting the Level and Timeliness of Compensation 19 4 Introduction 19 Approaches for Setting Compensation Rates 19 Who Defines the "Market" Price? 20 Choice of Price Baseline to Establish Compensation Rates 21 Establishing the Compensation Rate 23 Timeliness of the Payment 25 Promoting Awareness, Communications, 5 and Capacity Building 27 Background 27 Experience to Date 28 Preparing the Communication Plan 29 iii iv Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Preparing the Messages 29 Mechanisms and Channels of Communication on Compensation 29 Consistency of Message and Policy 30 Costs of the Awareness Campaign 30 Use of Nonpublic Sector Human Resources 30 Organizing Payment and Accountability 33 6 Introduction 33 Insights from Country Case Studies 34 Critical Success Factors 34 Who Pays? 34 Assessing Financial Needs 35 Payment Mechanisms and Timeliness 36 Certification 37 Use of Local Governments and Social Accountability 37 Core Components of Compensation 38 Good Practice Recommendations for Rapid Disbursements 38 Continuous Monitoring and Oversight 39 Where Are We and Where Do We Go from Here? 41 7 Compensation as an International Public Good 41 Characteristics of Good Practice in Compensation Schemes Designed to Help Control Disease Spread in an Emergency 42 Changes in the Structural Context under Which Compensation Is Occurring 44 The Future of Compensation in the Context of the Future of the Poultry Sector 45 Appendices 1. Examples of Compensation Schemes for Culling under Animal Disease Outbreaks in Selected Countries 49 2. Four Main Types of Poultry Production Systems 61 3. Avian Influenza Projects Approved under the GPAI 63 4. Sample Poultry Culling Record Owner's Certificate 77 References 79 Endnotes 85 List of Figures Figure 2.1: Poultry System Continuum in 2006 with Country Examples 10 Figure 4.1: Farm-Gate Prices for Finished Broiler Chickens and Day-Old Chicks (DOC) from October 2005 to September 2006 in Egypt 22 Figure 4.2: Differences between Number of Commercial and Native Chickens in the Philippines 23 Figure 4.3: Differences in Prices between Commercial and Native Chickens in the Philippines 24 Figure 6.1: A Suggested Animal Health Fund Mechanism 38 Acknowledgments This report was drafted by an interdisciplinary and interagency task team led by Christopher Delgado of the Agriculture and Ru- ral Development Department of the World Bank, involving staff and consultants from the World Bank, the Food and Agriculture Organization (FAO), and the International Food Policy Research Institute (IFPRI). The core drafting team consisted of Christopher Delgado, Patricia McKenzie, and Cornelis de Haan (World Bank); Anni McLeod and Ana Riviere-Cinnamond (FAO); and Clare Nar- rod (IFPRI). Additional contributions were received from: Jimmy Smith, Samjhana Thapa, and Melissa Williams (World Bank); Jim Hancock, Dan Vadnjal, and Jonathon Rushton (FAO); and Marites Tiongco and Devesh Roy (IFPRI). Funding was provided by the Operations Policy and Country Services and the Agricultural and Rural Development Departments of the World Bank, and by FAO, IFPRI, and the World Animal Health Organization (OIE). OIE kindly provided a venue for and supported a review meeting to discuss an earlier draft at its headquarters in Paris. Cordial thanks are ex- tended to the participants of that meeting and multiple meetings with colleagues on the World Bank's Avian Influenza Regional Focal Points team in Washington. Very helpful written reviews of an ear- lier draft were provided by Mario Bravo, Christiane Bruschke, Alain Dehove, Jacqueline Dubow, Simeon Ehui, Eric Marin, Piers Merrick, Stephen Mink, Laurent Msellati and Klaus von Grebmer. Overall assistance with funding and guidance was received from Henning Steinfeld and Joseph Domenech (FAO); Bernard Vallat (OIE); Max- imo Torero (IFPRI); and Sushma Ganguly, Olga Jonas, and Francois Le Gall (World Bank). Although every attempt was made to incor- porate fully all suggestions received, the core drafting team accepts responsibility for the views expressed in the report and resolution of multiple valuable suggestions for revision. v Acronyms and Abbreviations AHF animal health fund APHIS Animal and Plant Health Inspection Service AoA Agreement on Agriculture BSE bovine spongiform encephalopathy CBPP Contagious Bovine Pleuropneumonia CSF Classical Swine Fever CTAs community thematic associations DOC day-old chicks EC European Commission ELGA Greek Agricultural Insurance Organisation EU European Union FAO Food and Agriculture Organization FMD Foot and Mouth Disease GDP gross domestic product GPAI Global Program for Avian Influenza HPAI highly pathogenic avian influenza IBRD International Bank for Reconstruction and Development IDA International Development Association IFPRI International Food Policy Research Institute LFAs less favored areas LPAI low pathogenic avian influenza NGO nongovernmental organization OECD Organisation for Economic Co-operation and Development OIE World Animal Health Organization PCR polymerase chain reaction PVS performance, vision, and strategy PVS performance, vision, and strategy SMEs small and medium enterprises SOEs state-owned enterprises TB tuberculosis TSK Animal Disease Fund UK United Kingdom WTO World Trade Organization vii Executive Summary Highly pathogenic avian influenza (HPAI) under current conditions poses a major risk to human and animal health. Efforts to contain the disease are therefore in national and global interest. As the most widely practiced control methods for poultry involve culling birds that are infected or in regions immediately around infected animals, the most common practice to ensure the cooperation of owners of birds is to compensate them for the culling of their animals to achieve this public goal. Early identification of HPAI and the imme- diate culling of diseased or suspected animals are critical elements of reducing the risk of the disease spreading. The international com- munity and national governments have responded to this challenge by establishing funding mechanisms to enable compensation to as- sist in this strategy. Payment of compensation to farmers whose animals are being culled enhances producer cooperation through better motivation to comply with the disease reporting and culling requirements of dis- ease control packages. It reduces the time lag between an outbreak and containment actions, and hence diminishes the overall cost of control. To the extent that it reduces the virus load, it also reduces the risk of the virus mutating to becoming transmissible from hu- man to human. Enhancing early reporting and complete culling of diseased or suspected birds is thus the first objective of compensa- tion schemes. A second objective can be to reimburse losses of pri- vate citizens who have complied with a disease control process for the public good. This is compatible with the first objective. While the imperative of disease containment drives compensa- tion schemes, the reality of the severe impact of culling on very poor people cannot be ignored. However, a compensation scheme cannot cover all livelihoods losses caused by livestock disease control and it cannot replace social safety nets. This requires other measures, out- side the scope of this paper. The report seeks to provide guidelines on good practice for payment of compensation as part of HPAI stamping-out strate- gies. It is meant for national and international managers and proj- ect staff involved in containing HPAI. It responds to a request of the Senior Officials Meeting on Avian and Human Influenza held in Vienna, June 6­7, 2006, and the result of the work of a multidis- ciplinary team from the World Bank, FAO, and IFPRI. The report is based on review of the well-established literature of compen- sation practices in the developed world, staff interviews, experi- ence, and newly emerging gray literature (project documents, mis- ix x Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation sion reports, and so forth) on compensation in the Finally, it will be difficult to delink compensation developing world, and specific field visits to Egypt, practices from both changing needs for effective dis- Indonesia, and Vietnam. ease control and the issue of equitable production systems change as the disease becomes endemic. This aspect is also introduced briefly in the conclud- Preparedness Is Key ing chapter. An effective and efficient compensation scheme will compensate the appropriate beneficiaries for the ap- Identification of Beneficiaries propriate losses and at an appropriate level, with only a short interval between culling and payment As a general rule, the beneficiaries of compensa- of the compensation. This will only be possible if a tion are the owners of the animals. Other supply number of elements are already in place before an chain participants, such as feed suppliers and mar- outbreak. There needs to be appropriate legislation ket operators, may also incur losses when livestock for the control of animal disease in force that spells production and sales are disrupted by disease, but out clearly the rights and responsibilities of govern- they have not normally benefited from compensa- ment, livestock sector and marketing personnel, tion schemes. The type of production system sig- and farmers in animal disease control. There needs nificantly shapes feasible identification procedures. to be widespread awareness of the dangers of the Large, highly biosecure poultry farms (the so-called disease and how to mitigate them. Funds have to be sector 1 and 2 under FAO/OIE nomenclature) have readily available and the procedures and sequenc- generally good inventory records and culling is well ing of actions to be followed for compensation need controlled. Farmer documents are then a basis for to be agreed in advance. Preparations for the imple- compensation. mentation of expedient and transparent payment Under conditions of contract farming in these schemes need to be in place. systems, ownership of the birds decides the benefi- Procedures and sequencing of compensation ciary. If the contractor is the owner, he/she would require knowing who to compensate, when, how be compensated, and takes the responsibility for re- much, and how, and all the stakeholders have to be imbursing the integrator. If the integrator owns the aware of and have faith in the system. Widespread bird, he/she will receive the compensation. In a few knowledge in advance of what the stakes are (in- cases, arrangements have been made to pay the con- cluding poultry holdings) and identification of the tractor for lost income on a wage per day basis, with stakeholders are key elements in improving the gov- funds subtracted from the integrator share before ernance of the use of compensation resources, which payment. The issue of how to incorporate contract is especially difficult in emergency situations. growers into compensation process remains a prob- Because preparedness is essential to using cull- lem that many countries are only now beginning to ing and compensation effectively and efficiently for look into. More attention needs to be addressed to disease control, countries need to make a host of this issue lest it becomes a loophole limiting effec- arrangements without necessarily having national tive control of the disease. precedents to guide the way. The present document Identification of the beneficiaries for small en- tries to illustrate key lessons from countries such terprises and back yard systems (the FAO/OIE de- as Thailand and Vietnam (and others) that have nominated sectors 3 and 4) is more complex, as re- learned by doing and incorporated many of the les- cords are normally not available, and factors such as sons in revised strategies. Even with guidelines from differential ownership by gender come into play. Sur- elsewhere, national avian influenza committees will veys as part of the preparedness planning (not after still need to negotiate specific arrangements with the disease emerges), including the identification of national stakeholders in a way that fits local condi- ownership patterns, broad awareness of the existence tions, and this takes time and effort. of compensation and payment as an integral part of Countries faced with outbreaks before they have the stamping-out process, are then key factors to en- their contingency plans in place will need to adopt sure a broad participation of the sectors 3 and 4. the most basic measures. Even so, the same issues of who to compensate, when, for what, how, and how Type of Losses to Be Compensated much still apply. However, the need to move quick- ly for disease control will force many of the normal Normally, compensation covers only the so-called oversight tasks to a later date and is likely to make direct losses, which include the value of the animals, governance issues even more difficult. Executive Summary xi and sometimes also (in richer countries) the costs re- differentiation by type of bird (layer, broiler) and lated to the disposal of dead animals and cleaning age/weight of the group might be needed to fit and disinfection. So-called farm-level consequen- compensation as close as possible with prevailing tial losses, due to business interruption, movement market prices. An interesting intermediate solu- control, and price effects are not compensated, al- tion might be to pay not on the basis of numbers though in many developed countries private insur- but on the basis of the total weight of the flock. · Compensation rates should be no less than 50 ance schemes exist for such losses. Dead animals percent of the reference market value of suspect- before culling are often not compensated, however ed birds at the farm gate, and no more than 100 there may be a rationale to do so at least partially percent. The rationale for the preferred range of where either dead animals have market value (and 75­90 percent of the reference price and multiple thus there is the danger they will be sold) or disease considerations for being closer to one or the other control teams cannot respond within 72 hours of dis- limit are discussed in the report. Rates should be ease reporting by the farm in question. In all cases considerably lower for diseased birds and even the accurate computation of losses is greatly aided less, but positive, for dead birds, to provide posi- by having adequate farm-level records of poultry tive incentives for early and complete reporting. holdings, and it will be important to promote such a Careful attention needs to be paid to bird move- database prior to disease outbreak. Finally, the lion's ments during compensation to ensure that an share of actual economic losses to the countries in incentive is not being created for the influx of healthy birds to disease zones or diseased birds question may be indirect: lost feed sales, diminished to disease-free zones. tourism, absenteeism at work, and so forth. These · In dealing with small farmers in developing losses are never covered by public compensation countries, compensation should be paid within schemes. In principle, they could be insurable under 24 hours of culling by cash (or possibly voucher private sector contracts outside the livestock sector where handling cash presents a security threat if risks are well known, but they rarely are. and credible local formal financial institutions such as rural post offices are available); any delay is likely to have a significant effect on reporting. Setting Compensation Rates Compensation rates are variously set on the basis Establishing Awareness of (a) market value; (b) budget availability; and (c) production costs. Setting the cost on the basis of Experience from on-going campaigns highlights market value, wherever possible, is the preferred the absolute necessity of communication on dis- policy, as basing the cost on budget availability of- ease control and compensation, which when done ten leads to underpayment, and hence poor compli- properly may run from 10 percent to 20 percent of ance with the culling operation, and production cost the total package cost. The package should contain would favor inefficiencies, and is more complex to components of consultation with the beneficiaries, establish. Experience that emerges from the review advocacy, and information, using multiple media in establishing compensation rates based on market and channels. The specific messages on compen- values shows: sation should explain to affected farmers the need · Compensation rates as a percentage of a refer- for mandatory culling in cases of suspicion of avi- ence market price should be set before the dis- an influenza as a necessary measure to protect the ease emerges, as part of an overall preparedness health of the entire human population. They should plan, using average preoutbreak market prices contain the principles, procedures and grid of com- at the farm gate, computed with due regard for pensation levels, precise information on the exact seasonality and the transport costs from the local community relative to the reference market. For amounts, and payment procedures. Messages and special category birds (rare breeds, indigenous media should be prepared ahead of time with inputs poultry, fighting cocks, grandparent stock, other from both technicians and communication special- bird types), where market prices are not readily ists. They should also be consistent over time, since available, consultation with the stakeholders is frequent policy and message changes undermine required to set realistic levels. the credibility of the campaign. Private sector opera- · Uniformity of rates across the country and for tors, such as para-veterinarians, can play a critical different classes of birds improves the implemen- role in awareness raising and overall support to the tation efficiency of the program, and should be campaign, and their input on retainer fees should be pursued in situations with good control. How- more encouraged than is currently the case. ever, in situations of poor movement control, xii Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Payment Systems part of the emergency part preparedness plans; where lacking, they will both need to be set up To promote early notification of suspected out- when the disease emerges, posing considerable breaks, compensation for culled birds must be paid difficulties. promptly following the birds' destruction. Critical el- · The veterinary services (assessing the need and ements from an appropriate payment system follow. reliability of the culling), the Ministry of Finance · Rapid access to adequate funding for immediate (payment), civil authorities (security), and com- deployment as needs arise is essential. Sources munity leadership (transparency) should all be typically are government's own funds from the directly involved in the payment process. National Treasury, farmer's contributions, and · For sectors 1 and 2, bank transfers are the most those of donor partners. National budgets need adequate instrument; cash payments are the pre- contingency funds of at least 3­5 percent of total ferred method for those farms of sectors 3 and 4 budget to facilitate a rapid central contribution in without banking access. Vouchers are often less the event of an outbreak; alternative contingen- credible for immediate motivation of rural house- cy planning will be necessary where this is not holds, but may work where they can be integrat- available. ed with a dense local network of trusted financial · The share of compensation payments in total institutions, such as rural post offices. animal disease control expenditures under out- · To the extent possible, maximum use should be breaks ranged from 0­45 percent in the cases made of local banking entities, producer's orga- studied, with a central tendency of about 35 per- nizations, veterinary services, and nongovern- cent. Holding large sums as contingency reserves mental organizations (NGOs). Their fiduciary to allow a rapid response engenders a consider- assessment should be part of the preparedness able cost. For compensation planning purposes, planning. the upper range of foreseen culling during a se- vere outbreak should be capped at 10 percent of the national flock. Many outbreaks are controlled The Way Forward with culling of less than 1 percent of the national While over time the international public good ar- flock. Once the share of infected and closely asso- gument regarding the risk of human-to-human ciated birds exceeds 5 percent of the total nation- transmission of HPAI might diminish, transmis- al flock, vaccination typically starts substituting for culling and compensation. These percent- sion between animal populations of different ages, multiplied by the size of the national flock countries will continue to be a main reason for in- and again by 75 percent of the average farm- ternational funding of disease control in develop- gate poultry price, provides a rough estimate of ing countries. Moreover, in the likely event of the the range of funds that need to be accessible for disease becoming endemic within certain coun- compensation payments per se on short notice. tries, this will have major effect on the poor, and Countries that are important poultry exporters interventions under those conditions therefore and wish to avoid vaccination (such as Thailand deserve international support from an equity per- under its 2004 outbreak) should plan at the 10 spective. Stricter disease control requirements will percent (high) limit, countries with little in the have a major effect on the structure of the industry, way of poultry exports and a large percentage of with implications still to be clearly identified for smallholder poultry producers at 5 percent, and the future viability of the sectors 3 and 4. None- countries with little trade concern, a high degree of biosecurity, and a creditworthy public finance theless, compensation is likely to remain neces- system at 1 percent. sary for many years to come to promote the early · The system should be simple enough to be used eradication of outbreaks and to avoid the spread in difficult field situations and should make use of transmissible animal diseases. of existing institutions (for example, line minis- Under such conditions, compensation will: tries, veterinary services, financial institutions). It · Become part of modified stamping-out strategies, is important to clarify responsibilities in advance, with probably a lower priority to culling. Clear make provincial cross-agency coordination ar- principles of how stamping-out strategies should rangements, and establish local contingency evolve, and how compensation fits into such funding. If no system is in place when the disease evolving strategies are needed. emerges, the focus will need to shift to a greater · Have to become more dependent on the coun- reliance on ex post independent scrutiny to avoid tries proven political will to improve the key inordinate delays in paying compensation. institutions for animal health, in particular for · Eligibility databases and emergency payment early alerts and independent disease reporting. (see above) procedures should be prepared as The OIE tool for Performance, Vision and Strat- Executive Summary xiii egy (PVS) is a useful instrument to assess govern- · Be funded for the large commercial sectors ment capabilities. through private initiatives, probably as a mix · Be restricted to sectors 3 and 4, and be funded between mandatory levies and voluntary insur- from a mixture of national and international pub- ance; in many cases the public sector needs to lic funds, the latter in particular for the poorer work with the private sector to find equitable countries. ways to develop these systems. 1 Introduction Compensation as used in this paper relates to indemnification of private actors for losses incurred as a result of public action under- taken to promote the public good, such as in the case of payments to farmers for culled birds. Compensation is typically used as part of a stamping-out strategy in emergency situations or in support of inter- ventions for eradication after successful reduction of incidence. Compensation is fundamental to control strategies for the H5N1 strain of highly pathogenic avian influenza (HPAI for short), as it provides an incentive to the producer to report suspected disease outbreaks and comply with culling actions. It therefore reduces the time lag between an outbreak and containment actions and hence the overall control cost, and to the extent that it diminishes the vi- rus load, reduces risk of the virus mutating to become transmissible from human to human. However, the implementation issues are extremely tricky, as poorly designed schemes can in fact hasten the spread of the disease. Compensation can also mollify the effects of critical social and political shocks where large numbers of farms are decapitalized through culling of their stock. However, as will be dis- cussed, mixing greater social objectives with compensation for dis- ease control typically lessens the effectiveness of the latter without bringing to bear what is required for the former. Implicitly this report treats compensation as an international pub- lic good. This stems from the possibility of catastrophic international spillovers from HPAI outbreaks affecting human health. Compen- sation remains a key tool in support of stamping-out strategies for animal disease control even when human health is not at stake (as with Foot and Mouth Disease), but does not involve the same degree of priority, nor the implication that funding dedicated to the creation of international public goods should assist in meeting needs. Objectives of the Report and of Compensation Objectives of the Report The main objectives of the report are to discuss the purposes of com- pensation, review experience, link compensation practices to success in culling strategies, analyze how inappropriate compensation pack- 1 2 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation ages (such as in overcompensation) can create per- documented compensation schemes were applied verse incentives, illustrate pitfalls and uncertainties, to owners of cattle slaughtered due to infection of and develop recommendations based on observed cattle plague (Rinderpest) in Britain and Ireland un- good practice. der the Cattle Disease Prevention Act of 1866, and The desired outcome is to facilitate changes in then in 1884 in the United States (Wiser 1987).1 Com- compensation practices that improve disease control pensation schemes today continue to be designed through more prompt reporting of disease and bet- primarily as part of a disease control strategy, to ter compliance with culling initiatives. The primary encourage farmers to report outbreaks or potential target audience consists of decision makers in the disease problems, and to discourage them from sell- public sector of developing countries, their devel- ing animals rather than presenting them for culling opment partners in international agencies, bilateral (FAO e-consultation 2006). donors and international NGOs, and public/private Animal diseases that warrant compensation sys- coalitions, producer organizations, and NGOs in tems typically have several dimensions: (a) the type developing countries. of disease is highly contagious, may be zoonotic, The paper will review issues and formulate rec- and potentially engenders serious economic impact; ommendations on the following items of good (b) the type of animal is typically of importance to practice: commercial farming (cattle, small ruminants, swine, · Deciding who to compensate; or poultry), or closely related to these animals; (c) · Types of losses to be compensated; the source of funds involves a mix of public and · Setting the level and timeliness of compensation; private cost-sharing with the mix depending on the · Promoting awareness, communication, and ca- diversity of production systems (from large inte- pacity building; grated farmers to backyard smallholders); and (d) · Organizing payment while promoting account- the disease status of the country in question, with ability; and · Shifting compensation strategies as the disease compensation being less prevalent if the disease is becomes endemic. endemic. HPAI in most developing countries fits all of these conditions to varying degrees, but above all Purposes and Scope of Compensation has the potential to inflict devastating damage on Schemes global public health if the virus mutates (or more Compensation schemes have been implemented specifically is reassorted) to become transmissible for other diseases of livestock, including highly among humans. The human health dangers alone contagious animal diseases such as such as Foot are enough to justify using international develop- and Mouth Disease (FMD), Classical Swine Fever ment funds to speed control through culling and (CSF) and Contagious Bovine Pleuropneumonia compensation schemes, as the international "public (CBPP) and zoonotic diseases such as rabies, bovine bad" of transmission across borders of a mutated vi- spongiform encephalopathy (BSE), and brucello- rus dangerous to humans is clear to all. sis. Appendix 1 lists examples of different sorts of It is tempting to mix the issue of compensation compensation schemes that have been applied for for disease control purposes with a host of issues animal disease outbreaks. HPAI is a recent entrant beyond disease control. It can be argued that there to the scene, and is now included in compensation is a moral obligation of states to compensate for schemes in a growing list of countries, shown in the private property destroyed in the public good, appendix. Compensation processes are most fully where the destroyed property is a legally held documented in industrialized countries and those and productive asset, especially in the case of very with highly developed commercial livestock indus- poor people. Furthermore, poultry is often a sig- tries such as Brazil and Chile. nificant share of the assets of the poor in developing Historically, governments have entered into ani- countries, in particular for women and rural people mal health compensation programs for a variety of with few collateral assets with which to obtain fi- reasons. These range from the productivity cost of nance for rebuilding their source of livelihood. In letting a disease spread throughout the country, to Muslim countries located in the humid tropics, avoid restrictions on exports as in the case of OIE- poultry is the main source of animal protein, rais- notifiable diseases such as FMD and CSF, to emer- ing particularly thorny problems for achieving gency measures to protect human health (such as rural acceptance of stamping-out policies in coun- in the case of BSE or most recently HPAI). The first tries such as Indonesia and Malaysia. Poultry also Introduction 3 remains one of the best options for future pro-poor also help determine whether small-scale produc- agricultural growth (poultry and pork consump- ers remain in the industry; if they cannot remain in tion have been growing at 5 percent plus per capita smallholder poultry because of stricter biosecurity per annum in developing countries over the last 25 measures needed to control the disease, the format years compared to less than 0.5 percent for cereals) of compensation (cash versus targeted credits, for (Delgado et al. 1999). example) can help promote the move to alternative Yet compensation for disease control needs to be livelihoods. kept conceptually and operationally separate from The Global Program for Avian Influenza (GPAI) compensation for damages or asset rebuilding of allows for the use of up to US$500 million in Inter- the poor. Both are vital issues, but they require dif- national Bank for Reconstruction and Development ferent conceptual approaches, different operational (IBRD) loans or International Development Associa- measures and time frames, and have separate con- tion (IDA) credits or grants for new projects, or for stituencies (and thus funding sources). As will be restructuring existing projects, to undertake imme- discussed below, the losses from animal disease out- diate actions to control avian influenza. A share of breaks go far beyond lost sales of animals by farm- the funds is expected to be allocated to compensate ers and cannot all be realistically addressed by pro- for economic losses as a result of culling measures grams designed to speed up reporting of outbreaks to contain HPAI. In addition, client country gov- and facilitate compliance with culling. ernments and World Bank operational staff have Furthermore, as the disease becomes endemic, requested guidance on these issues. More than 25 outbreaks go from being new natural catastrophes countries are expected to receive financing under to more predictable occurrences. The latter may the GPAI by December 2006, and the presentation of require different measures for containment, in- a satisfactory compensation scheme is included as a cluding other methods for disease control such as condition of disbursement in the GPAI funding for vaccination, and practically-speaking local HPAI several countries. outbreaks may be harder to distinguish from those Guidelines for good practices are needed for of other poultry diseases that are endemic, such as predicting funding needs for compensation during Newcastle Disease. Containment when the disease emergency culling, both to eliminate unnecessary is endemic will surely require greater cost sharing costs from overestimating needs and to avoid loss by producers and consumers. Finally, recapitalizing of credibility from not having sufficient resources the rural poor after repeated outbreaks is a complex at hand for adequate or timely payments. Presently, operation involving credit, extension, institutional the numerous schemes being followed for HPAI changes, other measures to promote biosecurity, compensation exhibit significant variation across and a host of other items beyond the scope of rapid- and even within countries, along with highly vari- response compensation schemes. able outcomes in terms of disease containment. Approaches should be developed to allocate fund- ing by geographic zones within countries based on Background and Rationale for forecasted needs using transparent criteria. Sources Assessing Good Practices of funding need to be identified, and any differen- tiation between uses of funds from different sources Following the logic above, compensation is a vital explored (such as differences in use of multicountry tool to reduce risks to animal and human health regional, national host government, local, private through increasing the width, depth, and speed of sector, and donor partner funds). Management ar- producer compliance with reporting and culling or- rangements, accounting procedures, and disburse- ders. It also helps reduce both the direct economic ment arrangements need to be decided. costs (such as falls in exports) and the typically much The Senior Officials Meeting on Avian and Hu- larger indirect costs (such as lost economic activity man Influenza held in Vienna, June 6­7, 2006, iden- and the decline of tourism) of disease outbreaks.2 tified the need for guidelines based on best practices A further complication in developing countries is for compensation of producers of culled birds un- that livestock death and disease are considered to der developing country conditions as a top prior- be some of the main factors contributing to poverty ity in the fight against avian influenza. The World (World Bank and DFID 1999). How compensation is Bank offered to take the lead in preparing a report managed will greatly affect whether the poor will on good practice to be useful to its own staff, client benefit on an equal basis with large-scale producers. countries, and partner agencies with regard to the The institutional framework for compensation will design of compensation schemes. 4 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Context in Which peaceful compliance. The need for appropriate leg- Compensation Occurs islation for the control of animal diseases is key to the success of culling and compensation strategies. The legislation needs to include the specification of the right and conditions for governments to seize Animal Production Systems and Degree of private property, including the obligation of gov- Development ernments to compensate when they take property. Compensation has been given in some developed It is critical that such legislation is in place before an countries since the 19th century for culling in the outbreak. This need is not limited to HPAI control, context of a variety of contagious animal diseases, yet clear legislation on this is often lacking in devel- and also in the context of disaster relief in a vari- oping countries. ety of developing countries. While this report will The World Animal Health Organization (OIE) draw on these experiences, the focus here is solely recommends that destruction of diseased animals on compensation for culling of birds associated with and products and adequate disposal and disinfec- avian influenza control programs, with particular tion should be clearly spelled out in legislation as reference to developing countries. a responsibility of the central government. This re- Using the FAO system of classification of pro- mains the case even when the actual tasks are car- duction systems (FAO/OIE 2005), poultry farms in ried out by others. Furthermore, implementation of developing countries fall into one of four sectors. the legislation is crucial: the articles should clearly Sector 1 is an industrial and integrated system that specify who decides on culling, who pays, when, produces commercial breeds of poultry using tech- and how payments are made. There needs to be a nologies similar to those found in Organisation for clear chain of command, especially as many differ- Economic Co-operation and Development (OECD) ent kinds of actors (public and private) are involved countries, with adaptations where necessary for and speed and coordination are imperative. differences in temperature and humidity, and with relatively high levels of biosecurity.3 Sector 2 is an Variation in the Strength of Public Adminis- industrial but not integrated system that produces tration, Animal Health, and Rural Financial commercial breeds of poultry at levels of scale com- Systems parable to production units found within sector 1, but typically at lower (but still significant) levels of Institutional environments for animal disease con- biosecurity. trol and compensation payments also vary signifi- Sector 3 is neither integrated nor industrial, typi- cantly across countries, including across developing cally with low levels of biosecurity in developing countries. Key elements are the technical and insti- countries, producing commercial breeds of poultry, tutional strength of public administration, animal at relatively small scales compared to most well-es- health services, and rural financial systems and tablished commercial poultry operations.4 Sector 4 their capacity to enforce other control measures, is small scale or backyard, produces native breeds in particular movement control when the disease of poultry and has little or nothing in the way of bi- emerges. These range from the well established osecurity measures. Sector 4 still accounts for a large (Australia, European Union [EU], and Hong Kong, share of poultry production in most developing for example), to the emerging countries (Thailand countries, but most countries have all four sectors and Vietnam, for example), to still weak institution- represented simultaneously. Appendix 2 provides al environments (most other developing countries). a detailed description of the sectors. Countries that have a large proportion of sector 1 and 2 farmers are more likely to be those involved in export trade. Approach to Ascertaining Good Practice The Legislative Environment The report is the product of a multidisciplinary, Culling involves the destruction of private property multiagency activity based on review of existing for the public good, a process that should never be literature and interviews with selected developing arbitrary. Compensation schemes implicitly rec- country stakeholders, staff, or consultants from in- ognize the obligation of the public entity to make ternational agencies that have been involved with good on the loss to the private entity affected, even the implementation of compensation schemes for if the motive is to provide an incentive for rapid and the control of HPAI and with conditional cash trans- Introduction 5 fers to large numbers of poor people. Interviews of experts from OECD countries who have experi- Conclusions and Recommendations from ence with compensation for other diseases, such as Chapter 1 Newcastle Disease, FMD, and CSF were also used. The primary objective for establishing a compensation scheme Explicit attention was paid to necessary precondi- is to promote effective disease control. To achieve this objec- tions for the success of developed country strate- tive, a scheme must operate efficiently and quickly and be gies, such as strong veterinary services, availability well understood by those on whom its successful operation of diagnostic labs, and so forth. Field visits in sup- depends. It must also fit into the context of the whole disease port of the present paper were made to Indonesia, control plan. Egypt, and Vietnam. Finally, the study team fed into A second objective may be to reimburse losses of private citi- the terms-of-reference of an FAO-managed "E-con- zens who have complied with a disease control process for the sultation" of 200 experts around the world on avian public good. This is compatible with the first objective. influenza compensation, which fed directly into the Compensation schemes associated with mandatory culling present report. have a long history in animal disease control, but are relative- Judgements about "good practice" are often sub- ly new in the case of poultry, and particularly H5N1 HPAI. jective. The team adopted the following working The potential danger to global public health from HPAI clear- indicators of success and lack of success in compen- ly make its control a priority global public good. Many of the sation practices. lessons learned from compensation schemes involving HPAI control will be of great use in future outbreaks of other dis- Indicators of Success eases. · The spread of the disease is reduced compared to Successful compensation practices need to fit the production what happened in countries and regions where systems, animal health service and laboratory availability, ad- compensation was not used, or used late or in- ministrative constraints, and the enforcement capabilities and consistently. rural financial systems context of the countries in which they · Those who are entitled to be paid under an- operate. The most critical need is to enact clear legislation, pri- nounced rules are in fact paid. or to any outbreak, spelling out the rights and responsibilities · Compliance with reporting and culling is in- of government, service agents such as private veterinarians creased relative to estimated numbers of dis- and market agents, and farmers in the event of an outbreak eased and suspected (that is, still healthy animals or to prevent the threat of an outbreak. A clear chain of com- within the immediate neighborhood). mand is necessary for successful disease control, including · Livelihoods' distress directly related to the dis- the implementation of compensation. ease control process is significantly reduced. Compensation schemes cannot cover all livelihoods' losses · Measures for reporting, culling, and compensat- ing are linked, enshrined in law, and preferably caused by livestock disease control and they cannot replace agreed on by key stakeholders. all social safety nets, or administration becomes impossible. · There is clear and accurate communication about The limits to compensation must be identified so that addi- entitlement. tional private and public measures can be put into place to reduce loss of livelihoods. While the objective of disease control drives compensation Indicators of Lack of Success schemes, the reality of the severe impact of culling on very · The disease spreads. poor people cannot be ignored in developing countries. If · Persons who were entitled to compensation were smallholders are not effectively brought into compensation not paid. schemes, it is likely that they will be reluctant to report out- · The compensation process added to inequities. breaks, with negative consequences for all sectors. Nor is it re- · There was a high level of noncompliance. alistic to believe that small backyard operations will disappear · The operating procedures for reporting, culling, in response to prohibitions; experience shows that it is more and compensating were delinked and poorly de- likely that they will go underground and escape any effective scribed or poorly understood. veterinary control. It will be difficult to delink compensation · There was inconsistency in regulations or enforce- practices from the issue of equitable systems change as the ment across small geographical or administrative areas and between different size producers. disease becomes endemic in specific developing countries, and thus compensation practices will likely need to change over time, as will disease control strategies. 2 Deciding Who to Compensate: The Beneficiaries This chapter examines the potential beneficiaries of compensation in support of disease containment poultry sectors that vary greatly across and within countries. Where the poultry sector is very di- verse, different approaches may be needed for different production systems within a country. An attempt will be made throughout to differentiate approaches between smallholder and backyard pro- ducers, on the one hand, and large-scale integrated and commercial producers on the other, despite the fact that the literature is much larger on compensation of the latter than of the former. Who Has Been Compensated in Control of Animal Diseases OtherThan HPAI? Drawing on the pre-H5N1 precedents, primarily in developed countries, the beneficiaries in compensation schemes have been the owners of the animals, who have been paid for the direct loss of their livestock through culling and in some cases for various di- rect additional costs that were incurred during stamping out. There are many other kinds of losses associated with animal disease out- breaks, and these are discussed in Chapter 3. Who Is Involved in Poultry Production? Types of Production Systems As discussed in Chapter 1, developing countries often produce poultry in a variety of distinct production systems with different levels of biosecurity and institutional support, as described in Ap- pendix 2. Each type of sector presents particular challenges in de- signing compensation programs. Sectors 1 and 2 can be grouped together in designing compensa- tion processes. Production units in these systems tend to be large scale, with well-organized biosecurity systems and quality control processes. A well-run sector 1 or 2 farm in theory has a good chance of seeing suspect cases early. However it is recognized that even when there are sentinel cases, the general awareness of the disease may still be low, resulting in delay in identifying susceptible cases. 7 8 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Culling operations are on a large scale and the farm environment. Birds and eggs are primarily for con- staff can be trained to take part in destruction of sumption in the households that produce them or carcases and disinfection of premises, so that some sale to neighbours or in local markets so the owner of the direct costs of culling may initially be borne can easily be identified. The owner is likely to be by the farmer. Large-scale commercial farms usu- a woman, while the head of household may not be ally keep good records on numbers of birds, cost of a woman, and compensation processes need to be production, and sales. These usually can be verified designed with the actual owner in mind. after the fact, if necessary, with input suppliers. It Record keeping if any is minimal in sector 4. Birds is fairly straightforward under these conditions to may be of indigenous breeds with a different mar- calculate compensation numbers and rates based ket value to those in sector 3, and there are likely to on culling. Export trade usually takes place from be limited records of holdings. Sector 4 farms are the sector 1. most likely among farm types to be excluded (or at Difficulties arise when contract growers are part any rate absent from) from official culling schemes. of the system, since they may not technically be the Small-scale urban poultry keepers are included in owners of birds yet they may have made invest- this sector and may be the hardest of all to locate. A ments in production and may also suffer income field assessment of Egypt carried out as part of the loss from culling or during downtime. In Brazil and present work suggested that more than one poultry Thailand, for example, 70 to 80 percent of birds are producer in ten falls into this group. Because of con- found in sectors 1 and 2 (Delgado, Narrod, and Tion- cerns about human health, urban smallholder flocks gco 2003; Narrod and Pray 2001). Many (most, in ex- are highly likely to be targeted in a restructuring port zones) are contract farmers following biosecure plan and a number of countries have banned this practices and are well monitored by veterinarians type of operation. Such bans often result in back- employed by the integrator company. Broiler pro- yard poultry production going underground. duction in particular tends to be highly integrated, In emerging countries that have experienced while layer production is somewhat less integrated. HPAI, such as Indonesia and Vietnam, sector 4 may Sectors 3 and 4 also exist in these countries, but tend still account for approximately one-third of all birds, to account for relatively small and shrinking shares but sector 3--which previously was expanding and of production. increasingly prevalent--has shrunk dramatically.6 Sector 3 farms are commercially oriented, but tend to be less biosecure. They often do not have Poultry Systems as a Continuum consistent records on birds kept, production costs, or sales. Since the genetics and feeds used have more More than any other livestock system, poultry sys- in common with sectors 1 and 2 than with sector 4, tems lend themselves to scaling up, and when they the birds being compensated have more in common do, they may also change geographical location to with the commercial product than in the case of the be closer to final markets in large towns (Delgado, backyard sector.5 Narrod, and Tiongco 2003; Costales et al. 2003; Further, sector 3 farmers in developing countries Poapongsakorn et al. 2003). Industrialization may may sell into more than one market, with differenc- be encouraged by governments as a means of sat- es in prices, and may change their pattern of sales isfying growing domestic demand, developing an by season, in a way that is predictable but not doc- export market, or developing a sector structure that umented. They may also sell through middlemen. lends itself more easily to disease control. There The close contact nature of humans to birds in these continue to be large numbers of producers keeping systems that are integrated with family households birds on a small scale during the transition phase. carries the higher possibility of farm families being Where domestic demand is growing quickly, sec- exposed to the virus. It is also very easy for birds tors 1 and 2 often cannot grow fast enough to satisfy from a small-scale flocks to be sold, moved, or eaten it, and supply from sector 3, which responds very in advance of a culling operation and be very dif- quickly to market changes, may be preferred to im- ficult to trace. porting. The last point is even more applicable to sector Countries can be placed on a continuum accord- 4. Sector 4 flocks are kept with minimal inputs. In ing to the state of their poultry market, from those most places, birds roam freely around the farmstead that are concentrating the sectors very quickly to or village, in others they are kept in family court- those where change is very slow or hardly happen- yards enclosed by walls, but in either situation they ing at all. As suggested in Figure 2.1, the developed eat household scraps and what they can find in the countries are at one end of the spectrum, with Bra- Deciding Who to Compensate:The Beneficiaries 9 zil, Malaysia, and Thailand steadily converging on may involve long-term verbal agreements reinforced them in terms of productivity, and Cambodia, Bo- by family or ethnic ties. As cities have grown, sup- livia, and Burkina Faso are at the other end. Indo- ply chains have lengthened and widened and have nesia, Egypt, Nigeria, and Vietnam are among those become more complex and more anonymous com- that fell in between, and may in fact face the great- pared to village-level marketing (Delgado, Narrod, est challenge in designing compensation schemes, and Tiongco 2003). Accordingly, the number of criti- because they require equal but different efforts to cal points for movement and disease control within be made for the large commercial systems and the supply chains have multiplied, as have the number smallholder systems. of agents who stand to lose if poultry is culled any- where along the chain. The complexity of supply chains in sector 4 of Contract Farming developing countries and the relative ease with A problem in who to compensate arises in the case which producers in this sector can sell diseased ani- of contract farming, which accounts for the lion's mals into these chains illustrates the importance of share of poultry production in many developed disease control containing adequate compensation countries, such as the United States, and is increas- schemes for sector 4 farmers to control disease at the ingly important in many developing countries. In source, despite the greater difficulty in implement- this vertically coordinated system, management of ing such schemes in sector 4 compared to the other the poultry is separated from ownership, and both sectors. parties have sunk costs in the poultry flock; the inte- As to supply chain agents other than primary grators provide capital and the contractors provide producers, it is typically not feasible to include labor, land, and farm facilities. In countries with these agents in compensation schemes, even if their tested legal systems for enforcing contracts and losses are directly related to state-mandated sei- large sector 1 and 2 producers, such as the United zure of livestock products. Literature searches re- States, the prevalent practice is to pay the own- veal no cases of compensation paid to any market ers of the birds--the integrator--and to encourage chain participants other than poultry owners, with them to compensate the contract growers (Ott and the exception of one isolated case of live markets in Bergmeier 2005). In developing countries, there is a Hong Kong. In that case, the government developed greater risk that contracting farmers will never see a compensation and financial package to aid all em- any part of the payment, particularly if the govern- ployees of live market trades that were affected by ment is relying on the integrator to disburse some the mass cull and temporary suspension of business of the payments to growers. A suggested practice in May 2001 (Legislative Council Secretariat 2002). here is to split compensation paid to the two par- The Hong Kong approach is a solution applicable ties, with the contractor share being based on days only in the rare case where the number of persons of labor input and the sum of compensation per bird involved is small and easily located in one place, between integrator and contractor being the same as and the resources involved are minor compared to for independent farmers. the overall resources of the government involved. However if market chains are clearly the source of infection or spreading the disease, compensation Other Agents with Incomes Directly at Risk in some form might lessen the risk of them continu- from Culling ing to be a source of infection/spreading the disease In the industrialized countries, with production and perhaps this should looked at more closely in a coming mainly from sectors 1 and 2, market chains more in-depth study than this one. tend to be fairly simple and integrated. Distinct chains can be found for different types of birds or products. The contractual relationships between EnsuringThat Eligible People Are units are strong, with units owned by the same par- Included ent company or bound by legal supply contracts. In rare cases where production comes from sector 4, most marketing occurs within very short chains, Deciding Who Is Eligible often from the farmer directly to the consumer. Unless HPAI compensation schemes depart radical- In developing countries, other than for sector 1, ly from those for other livestock diseases and from relationships along supply chains are rarely based HPAI schemes to date, or some other very unusual on written contracts, although in some cases they 10 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation considerations hold (as in Hong Kong, above), those because a scheme that is designed to take account eligible for compensation should be confined to the of the priorities of different actors is more likely to persons making the management and sales deci- encourage compliance with disease control. sions for the birds or eggs involved in the stamping- · In countries with highly developed poultry sec- out processes. In most cases, these are the owners of tors, the main challenge may be to bring together the birds, with a few exceptions discussed below. the actors in market chains that may normally be Who decides eligibility for compensation depends quite separate, to discuss openly with those who primarily on the structure of the sector. Where sec- may be competitors how to organize and fund tors 1 and 2 are strong and there is previous experi- compensation. Both public and private actors are likely to be part of the decision making. ence in designing compensation schemes, the voice · Where systems are dominated by sectors 3 and 4, of industry tends to be strong. This is particularly the challenge is to find organizations that really the case where the large-scale private sector (sectors represent the scattered and highly diverse pro- 1 and 2) contribute to the funding of animal health ducers. Otherwise, smallholders are unlikely to services, as discussed further in Chapter 5. Small- be represented in the decision-making process. scale producers are seldom consulted to any great degree unless they are contracted farmers with a strong union. If the scheme is being designed in an Identifying and Locating Eligible People emergency, the process is likely to be more top down As well as determining who will be eligible for for lack of feasible alternatives. Over time, there is compensation, it is important to be able to locate value in developing a consultative process around them and to communicate with them their rights disease control methods, including compensation, and responsibilities. Deciding Who to Compensate:The Beneficiaries 11 Sector 1 and 2 producers are likely to be part of · Identifying those who have knowingly contrib- official records as registered companies. Where no uted to disease spread and should not be eligible database exists on these producers, it is a priority for compensation. to construct one. Sector 3 producers may not be Poultry owners who are typically excluded from registered, although countries whose poultry sec- compensation despite suffering direct losses during tors are becoming more concentrated are likely to stamping out are: introduce registration of flocks above a certain size. · Those who are not covered by official culling Sector 4 producers are rarely if ever registered and schemes. Reports from several countries have it is unrealistic to assume that they can be. There are provided information about small flocks being killed before official culling, birds being sold reports from at least two low-income countries that rather than culled because of lack of trust in the the very process of sending field agents from village compensation processes, or birds dying of dis- to village to register producers during an outbreak ease before culling teams arrived. helped spread the disease. · Those who lose business through movement con- If compensation is linked to culling, then regis- trol although their birds are not culled.7 This may tration of those eligible can be linked to the culling arise if ring vaccination is used together with process. When a culling team goes to a farm, details limited culling, so that birds stay alive but cannot of the farm, the bird owners, and the type and num- be sold at the normal time because of restricted ber of birds can be recorded, as well as any other movement. information about costs that may be compensated. · Producers who are outside of official disease con- Chapters 3 and 5 explore the process in more detail. trol areas but suffer from falling demand, falling On sector 1 and 2 farms, as well as physical in- prices, or difficulties in securing inputs. spection, farm records will be accessed and an of- ficial evaluator assigned. On sector 3 and 4 farms, Encouraging Farmers to Report Early where there may be no records, a physical count of the birds culled is necessary. Since successful cull- Usually farmers are reluctant to report the first case ing and compensation rely on trust, the registration of HPAI, either because they do not understand the process needs to be robust and appropriate to the issues or for fear of social and economic implica- local situation. Common practice is to involve three tions. In at least one case, paying a bonus above the persons representing three authorities-- veterinary, set compensation rate has been suggested as an in- financial, and civil--in registration. centive to get farmers to report as soon as they sus- The relationship between public and private vet- pect a case in a non-disease area.8 The most critical erinary service provision in the context of HPAI can incentive to get sectors 3 and 4 to report is to pro- change for the commercial sectors in the event of a vide them compensation within a 24­48 hour period serious disease outbreak such as HPAI. While the from culling. This however is not always possible as large-scale commercial sector may continue to rely discussed further in Chapter 4. on its own veterinary staff, the public sector veteri- narians retain a fundamental oversight role of all Mechanisms of Solidarity among sectors for disease control purposes, and under most Livestock Owners legislation their judgement prevails in the event of disagreement. In many countries, livestock owners, organizations, Important issues in identifying people eligible cooperatives, groupements sanitaires, and so forth, for compensation processes are: have been found to be effective ways to mobilize · Ensuring that people take part in culling schemes everyone in a locality, including small-scale produc- and are registered when they do. ers, to work together to contain disease outbreaks. · Determining who owns the bird in the cases of: Such collective action at the producer level greatly contract farmers, a bird culled at market, or where simplifies the public sector tasks and typically im- the head of household is not the same person as proves governance. It seems likely that they will the bird owner (husband paid for wife's poultry, work well where this is an option to assist in the and so forth). implementation of compensation schemes. 12 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Conclusions and Recommendations from Chapter 2 In compensation schemes for animal diseases, beneficiaries are normally live- stock owners who have directly been affected by culling schemes. Well-designed schemes try to reward for compliance with culling and encourage early reporting of suspect cases while exerting penalties for behavior that will lead to disease spread. Others in the livestock market chains, such as input suppliers, are not normally compensated, and neither are sectors other than the livestock sector that suffer consequential losses from animal diseases. Potential beneficiaries of compensation schemes for HPAI include owners of poul- try and eggs in four sectors, defined as 1 (industrial), 2 (commercial with good biosecurity), 3 (commercial within limited biosecurity, often small scale), and 4 (backyard scavenging). Different procedures and funding sources are likely to be appropriate for sectors 1 and 2 and sectors 3 and 4. Often producers are fearful of being the first farms to be found infected with HPAI, thus there is reluctance to bring birds in for diagnosis; schemes should con- sider providing a bonus to producers providing evidence of the sentinel case in a region. In countries where good practices can be identified, producers tend to be primar- ily sector 1 and sector 2, working closely with government and often focused on international trade. Under conditions of contract farming, the beneficiary is the owner of the birds. If the integrator legally owns the bird, he/she will receive the compensation, al- though often arrangements are made to pay the contractor for lost income based on days worked and these payments are subtracted from payments to integra- tors. A well-designed scheme requires clarity in advance as to whom the intended ben- eficiaries are, and this is dictated by the needs for effective disease control. Where sectors 3 and 4 are large, this requires ways to identify beneficiaries, including those not officially registered as poultry keepers. Compliance is most widespread where there is a consultation process to ensure that the needs of all types of beneficiaries are considered when planning the process, including a grievance mechanism for those whose voices are not being heard. 3 Establishing Losses This chapter examines the literature on compensation to assess which types of losses have been incurred as a result of animal diseases and what subset of these are typically included in existing compensation schemes. It also examines how losses are determined and recorded. Following Meuwissen et al. (1999), losses associated with disease out- breaks may be classified into direct losses and consequential losses (van Asseldonk et al. 2003 and 2006; Meuwissen et al. 1999). To these categories we add "indirect" losses outside the farm sector. Direct, Consequential, and Indirect Losses Direct losses comprise the value to farmers of the animals culled under depopulation and welfare control measures, and the disposal and disinfection costs to farmers associated with the outbreak. The direct cost to the public sector of organizing culling is not counted as an item to compensate farmers for, and thus is not included in this discussion. Consequential Losses Consequential losses arise at the farm level as a result of culling but are additional to direct losses. They fall into one or more of the follow- ing categories. · Business interruption: Occurs because farm buildings become wholly or partly unused due to stamping-out and welfare slaugh- ter or breeding prohibition, and stay empty until restriction zones are lifted. These costs are sometime referred to as "down time." · Losses related to established restriction zones: Farms in restric- tion zones face long periods in which animals and manure can- not be transported off the farm. These periods are characterized by animal welfare problems, extra feeding costs, and emergency measures for housing of pigs and storage of manure. Such losses will widely vary across farms and are difficult to assess. · Additional animal repopulation costs: These losses include extra farm level costs of restocking beyond the cost of the stock itself. · Losses from emergency vaccination: Where countries are engaged in poultry trade, meat from vaccinated animals may be ineligible 13 14 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation for export to high price destinations and become tain organizational aspects such as farm-level costs redirected to lower priced domestic or regional associated with monitoring of farms in restriction markets. zones. Compensation of direct losses is either based · Price effects: Livestock epidemics can have a se- on a predetermined animal value or actual market vere impact on meat prices. The impact depends on value at the time of culling. Generally, 100 percent aspects such as the size of the epidemic (duration, of direct losses such as animal value of producers size of restricted area), reactions of other countries are compensated. Other eligible direct costs may be (closure of borders, increased production) and whether vaccination is applied (which generally (i) refunded from national budgets, (ii) cofinanced leads to long periods of export limitations). through public-private financing schemes where farmers pay a compulsory levy, or (iii) incurred by the producer (Riviere-Cinnamond 2004, 2006). Indirect Losses Animals culled by the authorities can be directly recorded on a list made at the time of culling by the These losses are incurred outside the on-farm sector, culling team or by an accompanying recording team. as in the case of lost feed sales, lost tourism, and lower The number, type, age, and so forth, of animals are economic activity in rural areas. Research shows that recorded according to predetermined criteria. The such losses are typically significant multiples of direct categories need to be agreed on in advance, the re- plus consequential on-farm losses (Thompson et al. cords signed by more than one reputable signatory 2002; World Bank 2006d). In 1999­2000, an outbreak (including from the government veterinary team), of H7N1 HPAI in Italy resulted in US$122 million in as well as the animal owner, and copies of records compensation for destroyed birds, it was estimated kept in more than one place. that indirect costs exceed US$400 million for a total The list may also be on the basis of records from cost of over US$512 million (Halvorson et al. 2003). premises culled and existing animals records, how- ever this is likely to apply only to large sector 1 and Types of LossesThat 2 operations that are more likely to be registered Compensation Schemes and have reliable records on animal numbers, types, ages, and possibly weights, as well as on other ani- TypicallyTake into Account mal products such as eggs. The income appraisal ap- Direct farm-level losses are typically partly com- proach used in the outbreak of low pathogenic avi- pensated by governments (whether these are local, an influenza (LPAI) in Virginia implicitly took into national, or regional agencies, such as the European account the cost of inputs. The approach involved Commission (EC), is discussed in Chapter 6). The calculating the profit of meat bird production and types of losses that have always been compensated then adding total meat cost of production (Ott 2006). are for the animals that have been culled (includ- Alternatively, losses can be based on the record of ing breeding stock, eggs, and semen). Schemes rare- the total weight of animals when culled. However, ly cover the full value of rare or precious animals in Laos this only applied to very small flocks. such as grandparent stock or fighting cocks. Some In Scotland, the level of compensation for ani- countries in their compensation scheme include mals slaughtered is to some extent dependent on the direct farm level costs associated with culling such nature of the disease and the disease status of the as cleaning, disinfection, and disposal, but most animals. Under some compensation schemes (for developing countries do not. Consequential losses example for brucellosis and BSE for some suspects are almost always completely borne by the farmers and beef animals), the level of compensation may be themselves if not insured privately. Indirect losses less than the animals' actual market value, while un- are never compensated directly as part of an animal der other schemes, such as bovine tuberculosis (TB), health program, but may be covered in part by insur- reliance on valuations of individual animals before ance in countries with developed insurance markets. slaughter has sometimes resulted in compensation payments that significantly exceed the market value of the animals. The current system, requiring on-site Direct Losses Compensated in the EC valuation of cattle also affects the efficiency of dis- In Europe, compensation of direct losses is partly ease control measures. Delays in removing infected based on EC directives for OIE List A diseases.9 animals may be caused by the need to arrange and Direct losses in these cases include the value of agree upon individual valuations. Increased effi- the animal destroyed, welfare control measures, ciency and the speed of settling compensation will and--in this case from the developed world--cer- help to reduce the spread of the disease. It will also Establishing Losses 15 reduce the risk of animals dying before a valuation rectly, cover farmers' expenses for the cleansing and can be carried out, in which case farmers receive no disinfection of buildings and disposal of carcasses. compensation (Executive Environment and Rural In Canada, owners of animals ordered destroyed are Affairs Department 2004). However, on-site valu- awarded compensation for disposal costs including ation is mainly applied for large livestock, not for transportation, slaughter, cleaning and disinfection, small animals such as poultry. labor, and equipment.10 Interestingly, the central government of Vietnam has allocated some US$0.84 million to state-owned enterprises to cover veteri- Lessons from Vietnam's Experience nary services (77 percent) and disinfection (23 per- There were differences across provinces in records cent), but individual farmers are not compensated used for culling during the 2003/04 outbreak in Viet- (Riviere-Cinnamond 2005). nam. Ha Tay province had a census of all animals in There is some question as to whether compen- the province, and could cross-check the number of sation for disinfection cost should be part of the animals each farmer claims to have culled. The pro- compensation scheme, particularly in countries cess was made public so that neighboring farmers where there are limited funds. Government does could corroborate these numbers. In An Giang prov- not necessarily want to get in the habit of compen- ince, where poultry production concentrates mainly sating for normal biosecurity measures. Cleaning is on duck production, there were problems in deter- part of the normal biosecurity poultry management mining the number of animals actually culled. Of- process and deep cleaning of the litter tends to also ten data provided by farmers did not match the data take place after one or more cycles, depending on collected by the authorities. Authorities claimed that the local practices. In any event, compensation for farmers mis-stated numbers and categories so as to disposal and disinfection should not be at the cost of obtain higher levels of compensation. reducing the rate paid to owners of the birds As a result, recommendations arose to change the approach to supervision of culling, to include the fol- Sick and Dead Animals lowing members: head of the village, the veterinari- an covering the village, a representative of the wom- In developing countries, animals are killed fairly en's union (and other existing unions), and farmers fast when they are sick in sectors 3 and 4, and ei- whose animals were being culled. It was suggested ther eaten or sent to the market. In developed coun- that the data gathered at village level should then be tries, it is generally considered good practice to sent to the district, and consequently to the province compensate sick birds less than healthy birds on the authorities (Riviere-Cinnamond 2005). grounds that sick birds are worth less in the market Losses due to unproductive herds and flocks tend and that a lower payment also provides an incentive not to be compensated; however they are some- for early culling. This is more difficult under sector times compensated under the process of "welfare 3 and 4 conditions in developing countries. Once culling." This is not an infrequent problem. When birds begin to exhibit symptoms of HPAI, they are a movement ban has been imposed for a long time dead within 72 hours, and official response teams and farmers are unable to continue feeding animals, may not visit remote farms within that time frame. they may be officially culled and compensation Most schemes globally do not cover losses from paid. This in fact was observed in parts of Vietnam. animals dead by the disease before official culling. This is justified sometimes on the belief that dead birds have no market value. It is also designed to Disposal and Disinfection Costs create a strong incentive for early reporting and dis- The costs associated with the disposal of culled in- courage transportation of infected carcasses among fected flocks and farm disinfection can be large. In zones. This is especially necessary in the absence of some countries, such as the United States, the gov- good record keeping in sectors 3 and 4, since there ernment does the culling and disposal of the animals is little documentary proof that diseased animals to ensure it is done and done right (Ott 2006). Thus actually originated on the farm in question. Fur- these costs are not borne by the farmer. In Gaza, the thermore, poultry losses from other diseases such as Palestinian Authorities contracted out to the farm- Newcastle's Disease are as high as 30 percent in sec- ers the culling of their own animals. How this was tors 3 and 4 of many developing countries, and it is monitored is not clear. costly to ascertain the cause of death after the fact. Some compensation schemes in richer countries, The assumption that dead birds have no market where the government does not do these tasks di- value does not stand up in sector 4 of many develop- 16 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation ing countries, where dead and dying animals are of- exclude direct losses, which are separately cov- ten sold. Furthermore, there is a credible likelihood ered by the government with partial EC support. that some birds will be dead by the time that official Losses due to business interruption and in re- culling teams arrive at the farm, even if the disease striction zones are in some cases covered. These was reported at first appearance of symptoms. are compensated through set daily rates for the Because disease control is the overarching objec- duration of the period of restrictions. Losses as tive, it is better when dealing with sectors 3 and 4 a result of movement prohibition are covered by in developing countries to compensate partially for private insurance schemes in Germany, but not in dead animals, but less than for healthy ones and the Netherlands. sick ones. Public Disaster Assistance Losses Covered by Private Free public disaster assistance exists in Finland and Insurance or Public-Private Part- France. Although funds are public, the scheme is nership in Developed Countries administered by private insurers on a no-risk com- mission basis. There is therefore no risk transfer to As mentioned above, compensation schemes rarely private insurers. In France, consequential losses if ever cover consequential losses. However, farm- due to FMD are covered in a declared outbreak, but ers in richer countries have typically mitigated their the funds for compensation are taken from a fund consequential livestock disease risks through a va- accumulated in prior years from farmers' contribu- riety of public and private mechanisms that may tions (0.33 per livestock unit per year), with an un- eventually be useful for sector 1 and 2 operations in derlying guarantee by the central government. developing countries. Options used in Europe, for example, are: (i) private insurance schemes, (ii) free public disaster assistance, (iii) and public-private Public-Private Partnerships partnerships (Riviere-Cinnamond 2004). Finally, public-private partnerships for the com- pensation of consequential losses exist in Denmark, Private Insurance Finland (to some extent), and Spain (through a structure named Agroseguro cofinanced by the gov- Private insurance schemes in Europe exist for cer- ernment). Under this type of partnership, the gov- tain types of consequential losses from livestock ernment may act as an insurer or reinsurer. Under disease, as in the United Kingdom, the Netherlands, these schemes, the risk of losing financial resources and Germany. In Italy, private insurance schemes is transferred to the private insurers. For example, are exclusively for dairy production and sheep, and in Denmark, the government pays 20 percent above participation is very limited (less than 5 percent). In the value of the animals culled to cover consequen- the Netherlands, farmer participation is less than 10 tial losses. In Spain, the government covers conse- percent, and in Germany, participation levels vary quential losses up to a maximum of 41 percent of depending on the type of animal (for dairy cows less the value of culled animals in the case of cattle and than 50 percent, cattle 30 percent, sows 42 percent, 32 percent in the case of sheep and goats. and hogs 23 percent). All private insurance policies Establishing Losses 17 Conclusions and Recommendations from Chapter 3 Losses stemming from outbreaks of animal disease fall into three categories: direct (birds, eggs, sometimes the cost of disposal and disinfection), consequential (other on- farm costs or lost farm income due to the outbreak), and indirect (all other losses, off farm). Compensation typically has been limited to direct losses, although private and pub- lic-private schemes exist to defray farm risk of consequential losses in the developed countries. The types of direct losses that have always been compensated are for the animals that have been culled (including breeding stock, eggs, and semen). Some countries also include the direct cost associated with culling such as cleaning, disinfection, and disposal, though strictly this is not a cost eligible for compensation. Care should be taken that such costs are not mixed in with normal biosecurity practic- es. There is occasional compensation associated with welfare killings, but the amount tends to be at different levels. In addition, if there are cases where production is well recorded as in sectors 1 and 2, there may be a good case to compensate for dead birds associated with a disease. If covered at all, consequential losses tend to be covered under animal insurance schemes. Compensation for consequential losses can ideally be based on actual losses incurred or a flat rate based on the estimated loss over the period of business interrup- tion. The options are (i) private insurance schemes, (ii) free public disaster assistance, (iii) and public-private partnerships. Indirect losses occur outside the livestock sector as a result of disease outbreak. They include diverse items such as backward linkages to input suppliers, lost tourism, and lower demand for local products in income-depressed zones. Generally these losses are several times greater than direct and consequential losses combined, but they are never compensated as part of disease control strategies. Though it is not the scope of this paper, more work is needed on understanding these alternative mechanisms for sharing risk from consequential and indirect losses from animal diseases that are not normally covered by compensation schemes. 4 Setting the Level and Timeliness of Compensation Introduction This chapter deals with determining compensation rates and when it should be paid. Setting the right price and paying it at the right time are of critical importance. Prices need to be high enough to encourage farmers to engage in early and complete reporting of the disease. On the other hand, they need to be low enough to avoid encouraging farmers from still disease-free areas to present their animals to be culled, or others to move potentially sick birds across zones in hopes of receiving compensation in excess of prevailing market prices. Both of the latter behaviors have been observed in the field. Compensation prices are derived from applying a mandated percentage rate to a price series denominated in currency units per item compensated; the latter series may be collected from actual markets, adjusted down to the farm gate, and averaged over preset periods, to provide flexibility. Getting compensation prices right is tricky in an environment where normal market prices typically vary greatly across space and season, as they do in the best of times in most developing countries. The key issue is to provide an incentive for timely reporting in one's own zone. Unfortunately, there is little existing work confirming empirically that high compensation prices are positively associated with high reporting, even if this is what we would predict. There is even less rigorous empirical evidence link- ing high compensation prices to effective disease control, although there is now a body of case studies suggesting that paying too little is linked to disease spread. Approaches for Setting Compensation Rates There are three main ways in practice in which countries have set compensation prices. The Ad Hoc Approach Based on Resource Availability Several of the developing countries afflicted with outbreaks of HPAI investigated for this report appear to have based compensation per bird on an estimate of total funds available for compensation--typi- cally limited due to budgetary constraints--divided by an estimate 19 20 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation of the total number of birds to be culled. Sometimes pensation levels. Private industry in countries with this led to very low percentages of the market value large sectors 1 and 2 are invariably active in lobby- of birds being compensated. ing in this regard, both in terms of direct interest and--often just as important--to promote disease control essential to regaining export certification. The Cost-of-Production Approach National poultry associations often are involved, The cost-of-production approach has been applied as in the case in Gaza and Mauritania. In Australia, in some countries, and determines the price of a Canada, and the United Kingdom, rates are often product by summing the unit costs of the resources set on the basis of technical considerations supplied that went into making it. The cost can be composed by independent certified evaluators, using govern- of the cost of any of the factors of production includ- ment guidelines. In developing countries, public ing labor, capital, feed, breeding stock, or technology. sector institutions generally define the rate of com- Countries deciding to base the compensation pensation. Two issues that are especially important price on the costs of production decide so because are discussed in the following sections. either they do not have a market price for the ani- mal (that is, there is only layer production hence the The Level of Decision Making animal is not traded at the end of its productive life; this is the case of Kosovo) or the countries are not Simplicity is a key requirement for a compensation infected and have the time to establish those rates system, as it reduces transaction costs and the pos- and categories during "peace time" (this is the case sibility of rent-seeking behavior of farmers. The es- of Mauritania and Senegal, for example). It is rec- tablishment of uniform procedures to determine the ommended, however, that this practice should be level of the rate is generally recommended. limited to those rare cases where no market prices Uniform levels of compensation for the entire are available. country are also often recommended for the same The compensation rate obtained from the cost-of- reason. However, if there are major differences be- production approach at times can be higher than the tween different regions in poultry market prices, market price. The method is subject to measurement some geographical differentiation might be needed errors, possibly some of them deliberate. More im- to avoid transport of healthy birds from lower-priced portantly, by its nature, it rewards inefficient pro- regions into the disease area where compensation is ducers or categories of producers. Finally, it tends paid. Indonesia for instance has proposed introduc- to reward record keeping, which introduces a bias tion of a variable rate to take account of geographi- toward large commercial operations that is inconsis- cal price differences in view of concerns over the tent with the principal of providing an incentive for possible movement of birds. The regional differen- disease control in sectors 3 and 4. tiation concern is even more true when regions in one country border on another country with little effective border control, as often happens in remote The Market Value Approach areas of developing countries. A border province in In principle, the market value approach sets the one country may have market prices that are much compensation price at the level the good in question closer to the border region in the adjacent country will fetch in the market place, adjusted back to the than to other regions of its own country. Imposing a point at which the decision to sell is made (in this uniform national price would then encourage cross- case, the "farm gate").11 Usually rates are set based border smuggling of both healthy and disease stock on an average set of prices received during the last for culling. several proceeding months, and thus prior to the dip in prices usually observed during an outbreak. The Degree of Involvement in the The present report advocates a market-based ap- Stakeholders proach. Moreover, considerable difficulties exist in matching prices to goods, regions, and time periods, Public awareness and broad-based ownership are as will be discussed below. important aspects of a successful compensation scheme. These can be achieved through an involve- ment of all stakeholders in the setting of the price, as Who Defines the "Market" Price? is the case in Australia, for example. Where the com- When the compensation is paid by the public sector, pensation is funded by the private sector (levies), government institutions normally define the com- such as in the Netherlands, companies also have a Setting the Level of Timeliness and Compensation 21 major say in deciding the level, although the govern- gate value of animals that are destroyed. A 100 per- ment has introduced caps. There are few examples cent compensation was provided during the early of strong private-sector stakeholder involvement in epidemic (January­May 2004) because the epidemic setting the price in developing countries, although was widespread and devastating to Thai farmers. attempts have been made, such as in an East Asian In the second wave (July­Dec 2004), compensation country. was reduced to 75 percent. At this time, compensa- The independence of the evaluators is critical, in tion per bird was (in U.S. dollars) US$0.38­US$0.65, particular in the absence of good marketing informa- depending on the type of poultry (US$0.38 for quail; tion. The assessed values of animals rose threefold US$1.13 for broiler; US$2.00 for meat duck; US$2.25 after the outbreak of the FMD in the early 2000s in for backyard chicken; US$3.50 for layer chicken, lay- the United Kingdom (NAO 2002). With no function- er duck, or goose; US$7.25 for turkey; and US$65.00 ing animal markets, the government lacked a clear for ostrich) (Tiensin et al. 2004). Generally, compen- frame of reference to assess or influence the valua- sation rates are set for the class of animals that has tions against which compensation was paid, evalu- the largest representation at market, that is, full- ators were appointed in collaboration with parties grown broilers and layers. whose stock was being culled, and there is at least anecdotal evidence that valuations were signifi- Price Information by Sector and Seasonality cantly too high. However, local poultry associations should still be consulted to ensure effectiveness and Developed or middle-income countries tend to have transparency in the price-setting process. well-established monitoring systems of the fluctua- tions of prices over time, and products are fairly uniform. However, products vary more in develop- Importance of Remaining Flexible to Chang- ing countries across production sectors, and there is ing Market Situations much less price information for the poorer sectors. Setting prices without paying attention to what is For instance in Indonesia, sectors 1 and 2 have solid happening to market prices may lead to the move- price information records for commercial broilers ment of poultry from one area to another to reap the and layers, but these do not exist for the products benefits of higher compensation practices. Market of sectors 3 and 4. This is especially relevant when conditions can also change radically over time. To trying to implement a compensation rate during the prevent perverse incentives (either inappropriate onset of an outbreak (for example, the case in Côte presentations for culling when the rate is too high d'Ivoire). The timing does not allow for thorough or not reporting when it is too low) it is important research of price fluctuations given that decisions to blend consistency with flexibility when setting need to be taken swiftly. Moreover there are signifi- rates. cant seasonal effects on poultry prices, depending One way to do this is to set rates in terms of a on annual holidays and other festivities, that com- percentage of an easily verifiable market price that pensation schemes need to take into account, es- is adjusted periodically (like an index interest rate pecially since disease outbreaks in regions such as in the adjustable mortgage market of developed Southeast Asia also tend to be correlated with cer- countries). Where such a series does not exist (most tain seasons. As a practical matter, it may be nec- countries in the world have a retail poultry price se- essary to re-compute and update the base average ries for the capital city), it will be necessary to set market price every 4 to 6 months to handle seasonal up a mechanism for keeping such a series as soon and othermarket changes. as possible (discussed further below). The principle then should be to derive an appropriate adjustment Price Behavior during an Outbreak fact downward from the urban retail price series (if that is the one kept) to the farm-gate level in each Price reactions on the onset of HPAI also vary. In province or major region. some instances, because of consumer concerns re- garding the safety of the product, and dumping of diseased birds, the price drops as the disease Choice of Price Baseline to emerges. Such drops are typically temporary and Establish Compensation Rates prices are sometimes greater than the preoutbreak level once they have recovered due to decreases in The Animal Epidemic Act of Thailand provides domestic supply. For Cambodia, the price of broil- farmers a compensation of 75 percent of the farm- ers was highly affected, from a price of US$1.04 to 22 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation US$0.39 during the outbreak to US$1.30 after the break, but occur before disease onset. The approach outbreak (Rushton et al. 2005). In Maharashtra, In- of several projects funded from the Global Program dia, the price for broilers dropped to US$0.3112 per for Avian Influenza (GPAI) has been to base the kg liveweight (lwt) (from US$0.71/kg lwt) right af- compensation on the farm-gate price of two to three ter the HPAI outbreak in February 2006, and slowly months before the outbreak. went up again in April­May to US$0.51 per kg lwt. Figure 4.1 demonstrates a similar effect of the dis- Product Differentiation Issues in ease outbreak on the unit price of broilers in Egypt, Setting Prices with a major dip in November 2005, when the dis- ease emerged, but a rebound later. Using market prices adjusted to the farm-gate as The price rebound may be faster in Muslim coun- a base, compensation rates for different age cat- tries affected by outbreaks. The scarcity of the poul- egories within the broiler and layer group can try products due to widespread death, culling, and then be derived for the smaller animals. There movement restrictions experienced by all countries is however a trade-off between simplicity and affected by HPAI is compounded by a strong consum- fine-tuning the incentives, as introducing one er preference for locally certified Halal meat, the high rate will discourage the presentation for culling price of beef and goat meat, and the nonsuitability of of the more valuable animals, and encourage the pork as a substitute. This appears to have been the inflow of young or less valuable animals (day case in Egypt, West Bank and Gaza, and Indonesia. old chicks, spent hens). In general, there seems This same occurrence is reported in other countries, to be a shift from uniform rates to more differen- though the evidence is anecdotal in nature and it tiated rates, in particular in areas where move- seems there are quite significant regional differences ment control is more difficult to impose. Basing that make it hard to generalize such effects. the price on a unit weight basis, weighing all It appears that some substitution away from poul- birds together, as has been done in an East Asian try takes place as time goes on. In most non-Muslim country, might be a worthwhile approach in ar- East Asian countries, the consumption of fish and eas where control and payment infrastructure is pork has gone up after an outbreak, which helped weak, although it makes for more difficult and mitigate upward pressures on poultry prices. costly monitoring. The timing of price setting is crucial. It clearly has In Canada, compensation rates take into consid- to be divorced from the panic surrounding any out- eration factors such as genetic background, age, and Setting the Level of Timeliness and Compensation 23 production records. The assessment is made by a are needed, however it should be recognized that team of experts that includes a government veteri- the monitoring around such approaches is difficult nary inspector and two evaluators--one chosen by and costly. the owner and the other by the government. Evalu- ators are knowledgeable with respect to the market value of the class and breed of the animal ordered Establishing the Compensation destroyed, and the veterinary inspector, with the Rate written consent of the owner, may establish the val- ue based on knowledge of the local market. Each an- imal is evaluated and its market value determined; Healthy, Sick, and Dead Birds however, the compensation awarded is subject to As mentioned in Chapter 3, a declining scale of maximum levels set out in the regulations on "Com- compensation for healthy, sick, and dead animals pensation for Destroyed Animals" (Canadian Food is sometimes advocated for avoiding negligence of Inspection Agency 2000). biosecurity. It has been suggested that those who are actively part of a surveillance program should get Specialty Birds or Niche Poultry Items a 100 percent compensation for potentially infected animals, while others should get something less Special prices might be needed for niche poultry (Ott personal communication 2006). From the point products, such as kampong chickens in Indonesia, of containment, what needs to be avoided is the which carry a special price, and special classes of reverse situation. For example, one North African poultry, such as fighting cocks, and rare breeds. country compensated a 60 percent higher price for These products are especially important in the birds that died, compared to suspect animals that developing countries of Asia. In the Philippines, were culled in neighboring areas. In general, pay- there are more native birds than commercial (see ment for dead animals, while defendable from both Figure 4.2), and these chickens command a higher a livelihood perspective for sector 4 and because of price than commercial (see Figure 4.3). In such cas- the realities of slow culling response in developing es, consultation with the local poultry producers countries, should be markedly less than for other is needed. In Thailand, for example, compensation categories of bird to encourage early reporting, and for village chickens was about double that of com- in view of the likely involvement of birds dead from mercial broilers. Pet song birds are a particular con- other causes. cern in Vietnam. Finally, in countries where ducks In developing countries, it may be necessary to are important, similar procedures as for chickens seek some credible way of certifying the birds for 24 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation compensation as alive at the time of reporting, rather · The EU just introduced changes, which are cur- than requiring them to be alive at the time the culling rently due to come into force on January 1, 2007, team arrives. For instance, in Nigeria compensation is that would limit compensation payments for being made possible for farmers and households who animals slaughtered to 75 percent of the market have lost their birds as a result of HPAI, provided that value--80 percent in less favored areas (LFAs) the concerned farmers can provide evidence of re- and restrict it to only small- and medium-sized enterprises. Income losses due to quarantine ob- porting the disease to a local authority while the birds ligations and difficulties in restocking are also in- were alive, and has a stamping-out record signed by cluded in the compensation. a designated authority or a certification by the tradi- · In Thailand, the Animal Epidemic Act (Tiensin tional ruler or civil authority of the village. et al. 2004) provides farmers compensation of 75 percent of the value of animals that are destroyed. However, 100 percent compensation was pro- Compensation Rates Used around the World vided during the early epidemic (January­May In developed countries, compensation rates in the 2004) because the epidemic was widespread and range of 75­100 percent of the value of the animal are devastating to Thai farmers; compensation was typical with supplements for the direct farm costs reduced to 75 percent during the second wave related to culling and disinfection. In developing (July­December 2004). · In Indonesia, compensation rates were initially countries, compensation rates typically vary from set around about US$1 per bird, although the rate 15 percent to about 100 percent of market value of varied from region to region. The Department of birds culled. In one Southeast Asian country using Agriculture recommended 50 percent of the mar- 15 percent rates, farmers brought only their young ket value (at the time of the outbreak in 2004) and poor conditioned animals for culling, but sold (Riviere-Cinnamond 2005). However, even less their best conditioned and most expensive animals, was promised in some cases, and the rates were although diseased, in the market. apparently always well under the market price Specific rates are presented in Appendix 1. Some of US$2 (Parker 2004). This reportedly was still notable examples of compensation rates are: associated with a reasonable culling level, espe- · The United States (Animal and Plant Health In- cially where combined with a strong control, and spection Service) proposes to amend its regu- well-enforced movement restrictions. lations to allow the payment of 100 percent of · In most GPAI-funded projects, compensation purchase, destruction, disposition, and cleaning levels are between 75 and 100 percent of the esti- and disinfection costs associated with a FMD mated market value (see Appendix 3). outbreak.13 · In Vietnam, poultry producers' compensation Setting the Level of Timeliness and Compensation 25 initially was given as per the initial rates set poor movement control, might cause more harm by the central government at 5,000 VND/head than good. (US$0.32). Provinces were encouraged to top The payment of a fixed rate applied to an adjust- up the central government price, but a quarter able farm-gate market price is recommended. The of the poorest provinces did not have the funds price series in question and any adjustment neces- for this. sary to the farm gate should be specified in advance, in addition to the frequency and timing of updating Additional Special Considerations in the market reference price used. Setting Rates Incentives may be necessary to encourage farmers Timeliness of the Payment to report the first case, the sentinel case, so critical to disease control targeting. Many smallholders or Experience in the field shows that timeliness of pay- larger farms may be reluctant to report this first case ment is the most important factor in ensuring that for fear of being stigmatized, in addition to suffer- a high share of birds will be presented for culling. ing losses from the sanitary measures. To encourage Timely payment of others convinces smallholders, the reporting of such cases, additional financial re- in particular, that they too will be paid, and also ward may need to be attached to the compensation promptly replaces the loss of an important liveli- package for the initial case, perhaps in the form of a hood support. Experience in one Southeast Asian prepublicized set of bonus payments (Ott personal country reportedly showed a significant increase in communication 2006). Generally, a higher percent- culling percentages when compensation was paid age rate may be indicated for the first outbreak in a within 24 hours after the culling, compared to the country, before the disease becomes endemic. Thus normal payment period in that country of six weeks Thailand compensated at 100 percent of the farm- or more. gate market price in the 2004 outbreak, but at 75 per- The importance of timing varies depending on cent in subsequent years. sectors. In the case of Indonesia, timing mattered Differential rates are also sometimes used for dif- more than price for sectors 3 and 4 than for sectors 1 ferent farm sizes. In one Southeast Asian country, and 2. Presumably sectors 1 and 2 feel more certain the maximum farm limit for which compensation is about being paid, and have better ability to secure paid is 5,000 birds. In another country of the region, bridge financing while they wait, if necessary. In state-owned enterprises had a higher rate than the most developed countries, this is not an issue; for private sector. Finally, one North African country de- example, the EU allows a maximum period of four cided after initially compensating all farms to com- years for compensation payment. pensate only large farms. The effects of these changes It is difficult however to compensate within 24 were clear. After an initial peak in reports from the hours for sectors 3 and 4 in most of the developing smallholder sector, reports from that sector dried up world largely due to logistical problems and the no- completely after the suspension of the payment, and navailability of funds. This is discussed in more de- the main source of the virus remained unchecked. tail in Chapter 6. The general message is that a high In general, compensation schemes for HPAI in degree of preparedness is necessary before disease developing countries have been beset with frequent onset to have any chance of being effective at mak- changes in the overall rates, and changes in compen- ing prompt and appropriate payments after onset. sation categories and the farm types to be covered. Public awareness strategy is another key element This has led to loss of credibility of the schemes, of successful compensation schemes that also re- confusion in their implementation, and, generally quires considerable advance preparation, and is to impaired effectiveness, and should be avoided. discussed next. Frequent changes, particularly under conditions of 26 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Conclusions and Recommendations from Chapter 4 Adequate compensation rates and timely payment are critical to success of culling strate- gies in disease control. Compensation rates should be set before the disease emerges, as part of an overall preparedness plan, and should remain stable. Market prices, using preoutbreak prices adjusted down to the farm-gate level, are the most efficient basis for setting compensation rates; the rate should be a fixed percentage of a periodic average of a specified reference price series that is collected regularly. Peri- ods for re-averaging the base reference market price should be in the vicinity of every 4 to 6 months to allow flexibility in dealing with changing market conditions. If market rates are not available, such as often is the case for special category birds (rare breeds, indigenous poultry, fighting cocks, other bird types), consultation with the stake- holders is required to set realistic standards. Setting compensation rates based on production costs promotes inefficiencies, and should be avoided. However it needs to be recognized that setting the rate by market price is dif- ficult in some countries and setting the price by production costs may be the only option. This option should be limited to those rare cases where market prices are not available. Uniformity of standards across the country and different classes of birds improves the implementation efficiency of the program, and should be pursued in situations with good control. In situations of poor movement control, differentiation by type of bird (layer, broiler) and age/weight of the group is essential. An intermediate solution might be to pay per kilogram on the basis of the total weight in kilograms of the flock culled. Compensation rates should be no less than 50 percent of reference farm-gate market val- ue of healthy birds before the outbreak, and no more than 100 percent. The recommended range is between 75 percent and 90 percent of the reference price. The lower level of 75 percent applies when movement control is poor and/or there have been multiple out- breaks over time. The upper level (90 percent) applies when movement control is firm. The rate could go as high as 100 percent if it is an initial outbreak and it is especially im- portant that the response be rapid to prevent the disease from becoming endemic. In most developing countries, compensation should be paid for dead birds, but at sub- stantially lower rates than for diseased or healthy birds. Under those conditions, it is bet- ter to err on the side of paying too much or for birds dead of other causes than risk that birds infected with HPAI are not presented for culling. Careful attention should still be paid to what is happening to bird movements during culling to ensure that the admin- istration of compensation is not resulting in movement of uninfected birds into infected areas. Compensation should ideally be paid within 24 hours of the culling. It is recognized that in many developing countries this is difficult, but the best practice advice would be to pay it immediately; as any delay is likely to have a significant affect on reporting. 5 Promoting Awareness, Communications, and Capacity Building Background Risk communication generally seeks to provide information and ed- ucation, promote behavior change and protective action, convey di- saster warnings and emergency information, and foster joint prob- lem solving and conflict resolution. This chapter describes the role of communications in supporting the compensation component of an HPAI program. It analyzes audiences to be reached, the messag- es that need to be conveyed to achieve the tasks mentioned above, and the channels that should be used. It seeks to clarify the orga- nization and costs of campaigns to raise awareness for HPAI, and in particular for compensation schemes, and the training needed for the agents involved in HPAI communications. Communication about compensation should be one part of the whole communica- tion package in HPAI control, and as such it needs to be seen in the context of the rest of the package. This chapter seeks to establish broad principles; good practice in specific situations requires loca- tion-specific solutions and specialized skills beyond what is pos- sible in the present report. Target Audiences Identification of target audiences depends on the status the disease has in a given country. In a country that is not (yet) experiencing an outbreak, the primary audience might be national govern- ment officials, human and animal health workers, and farmer as- sociations; immediate goals are to encourage the establishment of systems, increase awareness and preparedness, and promote the establishment of protocols to deal with a potential problem. A very specific goal is to get poultry producers on a high level of awareness about the need to increase biosecurity measures to protect against the introduction of the disease. Finally, there is a need to set and describe emergency measures that will be put in place in the case of an outbreak. Training and simulation exercises are useful to achieving preparedness. 27 28 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation In a country experiencing an outbreak, crisis has to ensure consumers that it is safe to consume management communications and communication poultry products, provided that simple precautions on coping with the outbreak come into play; target are taken, to avoid a collapse of the market and un- audiences will include the general public, commu- necessary economic losses to producers in nonin- nity leaders, and the media. The desirable posture fected areas. The awareness campaigns, in their ef- is to remain calm, promote the adoption of safety forts to err on the safe side, have to date tended to practices, and reassure consumers and producers by unnecessarily damage the livelihoods of millions of informing them of safe handling and cooking pro- poultry farmers. cedures and of detailed culling and compensation Messages have also been developed and dissemi- measures in place. nated using various media on ways to improve bi- osecurity in poultry flocks. Those applicable to sec- tors 1 and 2 have tended to come from the industry Components of Effective Communications following general guidelines from the public sec- Effective communication for livestock disease con- tor, while those for smallholder systems have been trol is based on timely and effective responses com- produced by veterinary services with assistance bining a sense of urgency with sensitivity. It has from the international community and distributed three components: through veterinary, human health, and extension · Consults with the different stakeholders in a services, including those supported by NGOs. Com- two-way negotiation, with talking and listening munication about responsibilities and entitlements on both sides on the details of the compensation in culling procedures has been somewhat patchy. plan. In spite of its general acknowledged importance for · Informs people and seeks to induce behavior the success of culling strategies, experience in sever- change (including through peer pressure), al- al countries in Asia and Sub-Saharan Africa shows though it takes time to have impact (see below). that basic information on compensation levels and With regards to compensation, it would focus on the need for culling and procedures of the pay- procedures was often lacking at the community and ment system. district level. · Advocates a package of control measures to poli- While general campaigns can successfully inform ticians and industry leaders, with clear informa- the public on the disease, this does not necessarily tion about the possible costs; in a second phase, introduce behavioral change, particularly among provides information to decision makers about poultry producers and traders, who may be at transiting disease control strategies as the disease greater risk than consumers and are certainly more become endemic, with a changing role for com- likely to spread disease in animals. For example, in pensation (discussed further in Chapter 7). Thailand,14 the Ministry of Public Health has con- ducted an aggressive public education campaign re- Experience to Date garding HPAI, which led to 88 percent of the people surveyed knowing the name of the disease, and of Avian influenza communication to date has empha- those, all knew that infections can be deadly, and 97 sized delivery of messages, but has been less convinc- percent knew that interacting with and slaughtering ing on negotiation, particularly at the local level in infected birds are the most risky activities. However, decentralized systems. It has included quite success- only 6 percent named bird flu as their primary con- ful advocacy to international funding agencies, but cern, and of those in the rural areas with backyard response among national governments has been quite chickens, only 6 percent were aware of the symp- variable, depending on perceptions of risk. Most gov- toms of HPAI in poultry. ernments now have a task force on avian influenza, Most villagers knew that minimizing contact with yet many still do not have a clear operational plan, birds could reduce their risk for infection; however, much less a documented compensation strategy. they were not sure how they could minimize con- Up until now, the emphasis in communication on tact. The study concludes that general knowledge avian influenza matters has been on human safety. about HPAI does not result in behavior change Raising awareness about HPAI, including compen- without more specific recommendations on what to sation, without creating unnecessary panic is com- do. A campaign addressed to the general public is plex, and involves trade-offs. On the one hand, a probably of limited use if it is not accompanied by communication campaign on HPAI has to inform synchronized supporting activities addressed to key the general public about the serious public health stakeholders, such as government officials, poultry risk that the disease presents. On the other hand, it producers, the media, and so forth. Promoting Awareness, Communications, and Capacity Building 29 Preparing the have their poultry culled requires a professional Communication Plan approach by persons knowledgeable about the cul- tures concerned. Given the complexity of message Culling animals is typically resisted by poultry own- acceptance, communication specialists familiar with ers, especially of healthy stock within the culling the local culture should therefore work directly with zone. The message to be developed should explain technical specialists--for example, in animal health, to affected farmers the need for mandatory culling public health, environment, and home affairs--to in cases of suspicion of HPAI as a necessary measure develop messages that will resonate with the se- to protect the health of the entire population. Expe- lected audience. Messages should also benefit from rience in Southeast Asia, for example, clearly shows focus group meetings with farmers to factor in their an increase in the number of animals presented for perceptions and attitudes. culling where there is a nearby human case. Linking The input of communications specialists should the culling and compensation to public health risks not be to determine the message to be broadcast, and mobilizing peer pressure at the community lev- but to decide on the best manner, means, and media el is therefore recommended. for conveying those messages, according to target A clear, transparent, and consistent presentation on population, to avoid errors of communication (un- the procedures for compensation should be prepared. suitable messages or potential misinterpretation). This has to be done well before an outbreak occurs in Animal disease and compensation specialists also the country as part of an overall preparedness plan. need to defer to communications specialists on the The exact level of detail to include is still a matter of latter issues. Conversely, the technical content of discussion. Farmers should clearly know that a rea- all messages needs to be reviewed by competent sonable level of payment and prompt payment are to professionals in the field involved, including in be expected, if and when the disease strikes. In some the case of communications about compensating countries there is a reluctance to make announce- strategies. ments about compensation entitlements in advance One task could be to develop a stakeholder/com- of culling, perhaps from a fear that they may be mis- munication matrix that could look like the one be- interpreted and lead to counterproductive behavior low (or more/less detailed). (such as moving healthy birds into disease zones, or vice versa), or perhaps because of fears that the funding available will not meet expectations. Mechanisms and Channels In fact, experience from one West African coun- of Communication on try15 seems to indicate that communication of the Compensation exact amounts of the compensation far ahead of the culling led to fraud. Public communication of the Countries would start planning for the avian influ- compensation levels in that country was therefore enza crisis by being prepared. When the first cases recommended to take place only two days before of avian influenza are suspected, and subsequent the actual culling. The judgment of the present re- government response begins, a communication cri- port is that in general this is too short a period to sis center should be established under a previously establish general awareness of and trust in the designated national interministerial committee to scheme. Therefore the present report recommends a coordinate information flow between government combination of widespread communication before departments, the mass media, farmers, and the gen- any outbreak of the principles, procedures, and grid eral public. Experience has shown that establishing of compensation levels in percentage terms with re- such crisis centers (having the names of people in- spect to a reference market price. This should be fol- volved who have the authority and responsibility to lowed by precise information on the exact amounts contribute, their phone numbers, availability, and to be paid 48 hours before culling. By contrast, in so forth) before the crisis happens results in tremen- OECD countries, information about compensation dous time gains when the crisis actually hits. Most processes and levels is available (promptly, in the crises gain in momentum when there is a long pe- case of levels) on government Web sites. riod of lack of clarity, information vacuum, no des- ignated speaker, contradicting statements, and so forth. Preparing the Messages The experience that emerges from the few cam- Communication is a profession, and communica- paigns16 that have been organized and reported on is tion to convince often small, rural households to that effective communication includes a mixture of: 30 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Theme 1: Theme 2: Theme 3: Theme 4: Strategy Targeting Implementing ............ diffusion beneficiaries procedures Stakeholder 1: Training courses Government Checklists officials Stakeholder 2: Farmers associa- Workshops tion Stakeholder 3: Press conference Media briefings Media Stakeholder n : ................. · Mass media messages on general features of Consistency of Message the program, with the appropriate balance and and Policy emphasis between human and animal health risks, adapted to the local context, culture, and To maintain credibility, it is essential that the policy economy. on compensation and the message remain consis- · Interpersonal communication at local level, tent with each other and over time. For example, the through networks of traditional leaders, religious level of compensation was agreed at the moment leaders, teachers, and so forth, enabling people to of the outbreak in one North African country, but discuss the messages and the best way for com- munities to act on them. This will be the most im- changed over time as the outbreak proceeded. First, portant channel to create social peer pressure on everyone was to be compensated, afterwards it was early reporting. only licensed farms that would be compensated, · Mass media programs that focus on dialogue be- then only larger farms, and finally the compensa- tween small-scale farmers, local leaders, and ex- tion was stopped altogether. tension workers--providing a model for dialogue that should occur at scale across a wide range of communities, and encouraging the integration of Costs of the Awareness local solutions into the national response. Campaign · Special material and training for staff involved in the compensation. This is normally composed of Some indicative costs of communication packages representatives of the veterinary services, the pay- for general awareness of HPAI are provided in Ap- ing agency, and the community, which require eas- pendix 3. No data are available on the cost of raising ily understandable instructions on the exact details awareness on specific compensation issues, a rough of levels of compensation and procedures. estimate would be about 10 to 20 % of the total pack- A Participatory Surveillance System is presently age at the start of the campaign, probably less later. being developed and tested in a large Southeast Asian country with significant outbreaks by a team composed of FAO, Tufts University, and the gov- Use of Nonpublic Sector ernment, with USAID funding. This combines dis- Human Resources ease control with communication. Working at the village level, it is based on disease intelligence and Up until now, communications and the manage- an active surveillance system, combined with good ment of surveillance, control, and subsequent com- communication on culling and compensation proce- pensation has been in the domain of the public dures. Communication and technical capacities are sector. Still, many developing countries have over built through a training the trainer approach. While time established networks of independent or NGO- there are still major questions on transaction costs linked para-veterinarians that can play a key role and the practicality of scaling the approach up, this in the early detection, culling, and management of is probably one of the best models combining com- compensation, and communications if adequately munication and control actions. organized, trained, supervised, and provided with Promoting Awareness, Communications, and Capacity Building 31 the required incentives. Often they are closer to the Asia and Sub-Saharan Africa has shown, however, local communities, and form a much larger network that the incentive framework, normally on the basis than the public veterinary service. Experience in of a small retainer fee, is essential. Main Conclusions and Recommendations from Chapter 5 Communication on compensation is part of a general communication strategy, which is part of a general AI control strategy. The challenge is to balance messages and preserve public health while not causing a crash in the poultry market due to misperceptions of the danger presented by HPAI. An appropriate communication campaign focuses on information and education, behavior change and protective ac- tion, disaster warnings and emergency information, joint problem solving, and conflict resolution. The communications compaign: · Targets multiple stakeholder audiences on a broad range of behaviors and through multiple channels of communication; · Induces behavior change, without causing panic reactions; · Has multidirectional (vertical and horizontal) flow of information; · Should be part of the general preparedness planning, although exact details of the level might have to be withheld until just before the culling to avoid high expectations and fraud; · Is prepared by technicians and communication specialists working together, but with communica- tions control going to the latter and approval of the technical content of the final messages being overseen by the former; · Is tailored to local conditions and cultural norms; · Should provide consistent messages over time, as frequent changes reduce credibility and lead to confusion; · May cost 10 to 20 percent of the total control package; and · May need to mobilize nonpublic sector agents such as NGOs, paravets, and telecom compa- nies. 6 Organizing Payment and Accountability This chapter seeks to provide guidance on how compensation is budgeted and paid in an efficient manner. It also highlights the in- ternal control mechanisms and audit and accountability measures that would promote transparent use of financial resources and miti- gate the fiduciary reputational risks associated with compensation payments. Introduction There are 10 elements needed to ensure efficient and transparent management of a compensation fund, including: · Provision of the legal basis for establishing responsibilities for compensation fund administration; · Conducting a financial needs assessment (how much will com- pensation cost); · Identification of sources of funds and likely amounts from each source, and mobilizing needed financing; · Identification of the payment agencies needed to get the funds to the beneficiaries; · Deciding on the payment instruments (cash, bank transfers, vouchers, and so forth); · Designing the basis on which payment will be made, that is, cer- tification; · Communication of the time frame for payment; · Monitoring disbursements; · Operational and financial audits; and · Social accountability mechanisms. To promote early notification of suspected outbreaks, compen- sation for culled birds must be paid promptly following the birds' destruction and at a level that approaches the birds' market value. The implementation of immediate compensation at the time of cull- ing (or at least within 24 hours) is necessary to build trust and en- hance image and transparency. The challenge is to achieve balance between good financial control and accountability, mainly through ex ante controls and the need for a simple system that works under difficult field conditions, often in areas where institutional capacity and governance are weak. For purposes of efficient financial control, the overarching ob- jective is to ensure that compensation funds are budgeted for and rapidly mobilized; that there is adequate segregation of roles 33 34 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation and responsibilities of those involved in the pro- · An adequate grievance system. cess; that the correct amount is paid to the right The extent to which each of these factors is ac- people, as quickly as possible; and that there are tually operating on the ground will determine the financial and social accountability and grievance overall efficiency of payments. mechanisms. Who Pays? Insights from Country Countries where governments fund compensation Case Studies for direct losses from their national budgets include · There is a negative correlation between HPAI Sweden, Finland, Denmark, and the United King- risks (and a need for rapid response) and the ca- dom (UK). The main welfare control measure for the pacity to respond; countries with a high risk for UK FMD outbreak in 2001 was to slaughter animals being affected by the disease typically have poor thought to be suffering as a result of movement con- capacity to respond. trols. Producers were compensated for their mar- · Satisfaction levels for farmers interviewed re- ket value, which is considered the full value of the garding central government compensation strat- animal immediately before the slaughter (DEFRA egies are very low. 2005a). · Farmers' behavior (that is, incentives or disincen- Those countries that opted for public-private tives for culling) strongly depend on the way the partnerships are Austria, Belgium, the Netherlands, flow of funds was organized. · It is difficult to estimate compensation require- Greece, and Germany. In these cases, the arrange- ments at the district level and to provide funds ment generally includes a compulsory or voluntary in advance. levy, paid by farmers to a separate fund. In Belgium, · Districts are reluctant to prefinance compensa- for example, types of levies are differentiated in re- tion, since they may experience problems being lation to the animal species and farm size. reimbursed. In addition, levies for pig production vary de- · Fiduciary ex ante controls cause delays and phys- pending upon whether the production system is ical evidence suitable for ex post audits is de- open or closed. These levies are collected in a fund stroyed when the birds are disposed. This makes managed by the Ministry of Agriculture. Services it easier for farmer-culling team collusion in the delivered through these funds include some animal over-reporting of culls, since the figures cannot health and quality improvement measures. be easily checked once animals have been de- However, the collection method varies between stroyed. · In most cases there is no transition strategy to countries. Hence, Greece, which has a compulsory facilitate the integration of local disease control insurance program under the Greek Agricultural centers and emergency response team into the Insurance Organisation (ELGA), defines the com- routine activities of the local/provincial agricul- pulsory fee as 0.5 percent of the value of the stock tural service. The emergency phase is therefore production sold. In Germany, levy rates are fixed prolonged unnecessarily. annually according to need, set by an Animal Dis- ease Fund (TSK). There are also some countries such as Spain and Italy where farmers do not receive any Critical Success Factors compensation from their respective governments The principal enabling factors for good financial other than for destroyed animals. There is no volun- control and sustainability include: tary or compulsory levy (Riviere-Cinnamond 2004). · The institutional climate in which the compensa- Arrangements in developing countries have been tion scheme is being applied and the overall cli- even more varied. In Vietnam for example, where mate for public financial management arrange- public expenditure on agriculture is to a large extent ments, governance, and anticorruption; managed at the provincial level, both central gov- · Strong leadership and coordination of the com- ernment and provincial government contingency pensation program at the national level; funds contributed to initial compensation efforts, · Comprehensive public information campaign in- with poorer provinces less able to compensate com- volving the key ministries; pared to richer ones. · Effective coordination from the national level to Some developing countries use budgetary lines the village level; within Ministries of Finance, but others now have · An efficient and reliable underlying system for specific animal health funds, typically under the disease surveillance, reporting, and response; and veterinary service. In Brazil, producer associations Organizing Payment and Accountability 35 of larger farms funded some compensation to small- · Clarify responsibilities in advance; scale producers to assist in controlling FMD in the · Initiate provincial level, cross-agency coordina- sector that was affecting their export potential (Ca- tion arrangements; and margo Barros et al. 2003). · Establish local contingency funding. Flow of Funds Assessing Financial Needs There should be a clear understanding of how funds Compensation funds are being funded through will flow from the compensation fund (the govern- several sources including: governments' own re- ment's own resources plus donor concessional funds) sources from the National Treasury, poultry farm- to the central implementing agency, to the local level, ers' contributions, taxes on livestock and livestock and to final beneficiaries. A central contingency com- market facilities, and contributions from stakehold- pensation fund should be envisaged at the national ers and international donors. Some of the practices level, funded by the government's own resources observed are: where possible and if necessary with the assistance of · Earmarking a percentage of taxation revenues development partners. Notwithstanding the trend in (typically 3­5 percent of the gross domestic prod- fiscal decentralization and increase in budgetary au- uct [GDP]) for the establishment of general com- tonomy at provincial levels, centrally held funds pensation or emergency funds; that are quickly accessible to the provinces may be · Levying specific taxes associated with imports of poultry, earmarking same for the compensation more efficient than a proliferation of compensation fund; funds at the provincial level. · Raising funds at the local level; and In most countries there is a national coordina- · Establishing livestock emergency funds with tion committee for avian influenza, which would funding from both public and private sector. be responsible for the decision to initiate payments It is advisable to assess total compensation needs under the compensation fund. Based on this com- well before any outbreak, so that this sum can be al- mittee's instructions, compensation funds are re- located in the national budget or requested from de- leased by the ministry of finance, if the compensa- velopment partners, with documented justification. tion fund is centralized. If the veterinary service Ideally, there should be some basic system to build is the budget holder (for example, in the case of a database at the local level. This data can then be Serbia), funds for compensation are released upon aggregated at the national level. In practice, for ex- the decision of the department of veterinary ser- ample in the case of Serbia and Montenegro such vices. The choice will depend on the current struc- a database is being built jointly by the Ministry of ture of the public finances, but due regard should Finance and the Ministry of Agriculture. Write ac- be given to roles and responsibilities, which should cess is restricted to the Department of Veterinary be defined in advance. services and the budget department of the Minis- try of Finance. Generally, access to the list is not Risk-Sharing given to the public. In the case of medium- and large-scale farm- The level of risk sharing between central govern- ers, a beneficiary database or a simple list of eli- ments and province authorities often determines gible farmers should be produced as a basis for a each actor's behavior and consequently the effec- reasonable estimate of resource needs. This can tiveness in containing disease spread. In cases where be done before any evidence of the disease in the the risk is mainly borne by the central government, country. This database or list would have an ad- there is less pressure for provincial authorities to ditional control function for being the basic source control the outbreak, to educate and reach beneficia- against which payments to beneficiaries are subse- ries, and consequently to compensate them. Where quently reconciled, during the ex post audits and possible, compensation schemes should also involve monitoring phases. In the case of backyard poultry, the private sector producers (and farmer associa- an aggregate assessment based on a census of the tions, unions, NGOs, and so forth) so as not to leave human population in the area and the estimated the burden to the public authorities alone. However, number of poultry per household will give a rea- such types of associations tend to be very rare in sec- sonable estimate.17 tors 3 and 4 in certain developing countries. Given the overriding need for a rapid response, To mobilize funds rapidly from central compen- the process of building eligibility databases and sation funds to affected households, it is important to: emergency payment procedures are likely to go on 36 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation in parallel. Notwithstanding, these processes and Payment Mechanisms and resulting databases would need to be reviewed as Timeliness part of the ex post accountability arrangements. In addition, where compensation payments are being In practice payments are being effected through (i) handled by local governments, there should be an bank transfers directly to beneficiary accounts, (ii) oversight committee involved in the process of checks, (iii) cash, (iv) payment vouchers, and (v) identification and payment of beneficiaries, which transfers to village bank accounts for further pay- should include the civil authorities and represen- ment in cash to villagers. The time frame for reim- tatives of the community. bursement varies widely. In the case of 13 World A further problem with establishing compen- Bank­funded projects reviewed during the exercise, sation funds is that keeping a large sum idle for the shortest projected lag was 7­15 days, but could contingencies that may never arise is not without span as many as 60 days. Seven projects had not cost, and thus governments and their partners are specified the time frame at the time of approval. reluctant to do it. In the early stages of the HPAI In the case of large- and medium-sized farmers, outbreak in Southeast Asia, Vietnam was able to the issues, risks, and procedures are not inherently fund compensation mostly because of the avail- different from regular investment operations. For ability of general contingency funds in the na- commercial poultry farmers payments should be tional budget. The World Bank was able to help made directly through the banking system to bank relatively quickly because of the procedures al- accounts, either through direct transfers or alterna- ready developed for rapid response to earthquake tively by checks. Compensation by check will de- emergencies. Now that risks are better known, at pend on the local banking system (microcredit net- least for some regions, there is a need to explic- work) or public payments office. itly plan for funding compensation in advance, at For small farmers, ideally compensation should both the national and international levels. be in cash at the time of culling or within 24 hours. The share of compensation payments in total For this to be possible, culling teams should be ac- animal disease control expenditures under out- companied by payment officers or payment officers breaks ranged from 0 to 45 percent in the cases should follow shortly after. Where cash is not read- studied, with a central tendency of about 35 per- ily available at the time of culling the use of deferred cent. For compensation planning purposes, the options is recommended; an example would be pay- upper range of foreseen culling during a severe ment vouchers in lieu of cash, with payment being outbreak should be capped at 10 percent of the made promptly within one week of culling. Whereas national flock (eligible database total). Many out- the use of payment vouchers has reduced the risks breaks are controlled with culling of less than 1 of fraud and corruption as well as the risks to per- percent of the national flock. sonal safety occasioned by banditry, in some cases Once the share of infected and closely associ- this system is fraught with problems and in some ated birds exceeds 5 percent of the total national cases farmers' satisfaction was in fact reduced. flock, vaccination typically starts substituting Although there would appear to be less risk of for culling and compensation (see Chapter 7). fraud with deferred payments in the form of vouch- Countries that are important poultry exporters ers, the study conducted in Niger suggested that and wish to avoid vaccination (such as Thailand there are major disadvantages to the use of vouch- under its 2004 outbreak) should plan at the 10 ers. In fact the risks may be much higher since vil- percent (high) limit, countries with little in the lagers might not understand or be reluctant to ac- way of poultry exports and a large percentage of cept vouchers, or they may find it difficult to cash smallholder poultry producers should plan at 5 them due to distance, bureaucracy, or corruption. percent of the database total, and countries with In general, payments at a counter may increase vil- little trade concern, a high degree of biosecurity, lager reluctance to participate because of unfamiliar and a creditworthy public finance system should territory or inexperience in dealing with the admin- plan at 1 percent. istration. The applicable percentage, multiplied by the Deferred options such as the use of vouchers size of the national flock, and again by 75 percent would only be recommended in cases where the of the average farm-gate poultry price, provides a person holds a bank account (most likely commer- rough estimate of the amount of funds that need to be cial farmers) or in the case of small-holders living accessible for compensation payments per se on short in areas where there are local banking or post office notice. facilities that they already use. Organizing Payment and Accountability 37 Certification veterinary officers, the head of the village in which the culling has taken place, and by each individual Culling and compensation certificates18 should owner of the culled birds. serve the dual purpose of certification of culling and evidence of receipt of cash, or in cases where payment is deferred, the certificate should serve as Use of Local Governments and the payment voucher. Certification should reflect Social Accountability ownership, date, location, category, number of birds culled, unit compensation, and total compensation. The use of local governments should certainly speed Witnesses should sign the certificate: at a minimum up the flow of cash to the poor, but will increase the certifying officer (as a member of the culling the risk of diversion of funds (theirs or donors). team), the owner, and a representative of the local The social accountability mechanisms for avian authority. flu should be mainstreamed into local govern- Of the 13 projects approved by the World Bank ment arrangements, as far as possible, to reduce under GPAI as of September 8, 2006, only 4 proj- resistance to scrutiny. In this case the four basic ects specifically referred to the use of culling certif- pillars of good financial control (segregated du- icates (Albania, Armenia, Kyrgyz, and West Bank ties within the local government, efficient flow of and Gaza). No specific requirements were out- funds, timely reporting, and independent scrutiny lined for nine of the projects. Of nine functioning through the use of financial and social audits) are national compensation schemes reviewed by FAO, still relevant. three issued culling certificates, with one carbon However in addition to these four, it is also es- copy used as the payment voucher for producers. sential to develop a strategy to engage farmers, Forms have also been prepared in two West Afri- including smallholders, in scrutiny of the official accountability processes. The participation of com- can countries that have yet to experience an HPAI munity-based organizations, NGOs, and citizens in outbreak. general has proven to be one of the most critical fac- In the case of Egypt, payments were only made tors for ensuring successful accountability arrange- to large-scale farms. A committee consisting of a lo- ments and in mitigating the risk of funds being di- cal official, a veterinary officer, an official from the verted. Community involvement should be in four Principal Bank for Development and Agricultural critical areas: (i) decision making or determining Credit, and the farmer concerned made a count of payment eligibility; (ii) payment; (iii) scrutiny of ac- the birds that would be compensated. A letter with counts and reconciliations; and (iv) grievance com- the numbers culled was generated and signed by all mittees. Often the vigilance groups are themselves parties. This was then submitted to a local branch subject to "political capture," therefore vigilance of the bank for payment. There was no process that committees or village assemblies should be formed, allowed the number paid to be tallied with the num- but should not include people who are direct ben- eficiaries themselves (a conflict of interest). Instead, ber that died or were culled; the kill team was dif- they should represent groups of citizens, as in the ferent from the assessment team. Some of the large- case of community leaders. scale farmers were in dispute with the government There should be negotiation between the local over the value of payments. government and the representative community or- In Lao People's Democratic Republic, all birds in ganization to secure a commitment from the local the locality are culled and payment is made at the government to regularly publish the list of payees, time of culling using a flat rate by weight, irrespec- basis of payments, and the amounts in a way that tive of the type of bird. In the case of Indonesia, can be scrutinized by the affected communities. This veterinary officers are primarily responsible for should be supported by a simple, practical mecha- making payments, in cash at the time of culling. nism for public review of the local compensation Reportedly, it is working effectively, providing payments and the financial accounts of the compen- bird owners with an incentive to report HPAI cas- sation funds. At the central level there should be an indepen- es and a guarantee of on-the-spot payment. Subse- dent ex post reconciliation of actual payments quent requests for reimbursement are made on the against approved lists created during the estima- basis of a form (which combines a certification of tion phase. In the case of Nigeria, for example, culling and compensation in one single process), where there is a decentralized structure, com- detailing the amount of compensation paid per munity thematic associations (CTAs) comprising bird, and the total amount of compensation paid community members play a key role in identify- by bird owner. The report is signed by the team of ing, preparing, and signing off on compensation 38 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation proposals (assisted by community development calendar days from the date of appeal, and convey officers). These proposals are forwarded to techni- the further step adopted for the resolution of the dis- cal committees (comprised of members of CTAs, pute. Efforts should be made to explain these rights civil society, and local government authorities). to farmers when culling takes place. The local government technical committee makes the final decision to pay, at which time resources are transferred directly to the CTA's bank account. Core Components of Payments to farmers are then made once culling is completed. Compensation Few compensation funds however propose or ac- To bring together the core components, Figure 6.1 tually make provisions for grievance handling and depicts a suggested animal health fund (AHF) ap- dispute resolution. At the local level there should propriate for a smaller country with limited infra- be a mechanism to handle complaints related to structure and public veterinary services. denial of access, nonpayment, incorrect payments, or lack of timeliness. Communication campaigns should make farmers aware of: (i) who should re- Good Practice Recommendations ceive the complaint ("hotline," local committee); for Rapid Disbursements (ii) who will investigate; and (iii) the time frame for receiving a response. In the case of Tajikistan, These include: for example, a dispute resolution mechanism has · Assessment of financial resource needs and in- been established to cover disputes concerning the clusion in national budgets. · A central contingency compensation fund should be amount of grant, eligibility criteria, procedures, or envisaged at the national level, funded by the gov- any other concerns. Households (farm families) ernment's own resources where possible, and if nec- have the right to appeal to the implementing unit, essary with the assistance of development partners. which should make a final decision within seven Organizing Payment and Accountability 39 · The availability of provincial contingency funds Continuous Monitoring and improves the timeliness of response. These funds Oversight can be subsequently reimbursed from compensa- tion funds, held either at the provincial level or Experience suggests that compensation schemes are centrally. particularly susceptible to fraud, error and abuse. The · When designing the flow of funds, greater use social accountability mechanism designed to enhance should be made of local banking entities, pro- transparency have been described earlier in Section ducer's organizations and NGOs who could have 6.8. In addition, to provide fiduciary assurance that ready cash flow at local levels and who can be subsequently reimbursed from central compensa- eligible poultry owners, and only eligible owners, are tion funds. paid in full, and to reduce the risks of fraud and abuse, · Multidisciplinary teams reduce the risk of con- compensations funds should be subject to monitoring spiracy and collusion (livestock for culling, MOF and oversight through periodic operational reviews for payment, security). and independent external audits. · Surveillance teams should be followed very close- Additional measures include: ly by culling teams (ideally together). · Ex ante internal controls in the poultry culling · Multicopy paper forms for recording culling and and certification phases, described in section 6.7. entitlement to payment create trust for farmers. · Annual operational reviews: The terms of refer- · Next-day presentation of culling records to micro- ence for the operational audits should focus on finance entity for payment. confirming validity and legitimacy of compen- · Payment vouchers also maybe appropriate where sation payments made for a randomly selected there is a need for coverage of large areas and it is sample of villages. Verification should include impractical to mobilize payment officers. checking against the databases maintained by the · Local networks of paymaster offices should be ministry of agriculture, collecting and verifying used to release the amounts needed with the sup- information available and obtained at the village port of private banks, producers associations, and level, checking with individual poultry owners, NGOs for cash availability. and checking forms and reports, and so forth. · A local payments officer needs to be used togeth- · Independent external audits: External indepen- er with a security guard for paying smallholder dent auditors will need to provide an opinion on poultry farmers. the reasonableness of the accounting, reporting, and internal controls in respect to the operation of the compensation funds. Conclusions and Recommendations from Chapter 6 Compensation funds are being funded through several sources including: governments' own resources from the national treasury, poultry farmers' contributions, taxes on livestock and livestock market facili- ties, contributions from stakeholders, and international donors. The system used to manage, account for, and control payments should be simple enough to be used in difficult field situations and should make use of existing institutions (for example, line ministries, veterinary services, financial institutions) to avoid high administrative overheads and additional costs of transferring money. The efficiency and accountability and governance arrangements of these institutions should be evaluated prior to engaging them. If the disease emerges, and no assessment has yet been done, the focus will need to shift to a greater reliance on ex post independent scrutiny to avoid inordinate delays in paying compensation. The availability of provincial prevention funds improves the timeliness of response. These funds can be subsequently reimbursed from centrally held compensation funds. Where donor funds are being used to fund compensation payments, project design should outline alterna- tive procedures that would apply in the event that there is an outbreak prior to satisfaction of conditions of effectiveness or disbursement. An example would be retroactive financing to cover the period between the outbreak and satisfactory completion of the conditions of disbursement. (continued) 40 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Conclusions and Recommendations from Chapter 6 (continued) There is a need to maintain a balance between the necessary front-loaded ex ante controls and the over- arching need to mobilize payments rapidly. Many operations as designed have onerous conditions of effectiveness and disbursement including detailed compensation manuals, which by nature take time to be developed, and result in a significant delay between approval of proposals and actual draw down of compensation funds. These conditions of effectiveness and disbursement are more appropriate if the country is in the emergency preparedness phase (or where the disease is endemic) but are not appropri- ate in countries where there are actual outbreaks. Given the overriding need for a rapid response, the process of building eligibility databases and emer- gency payment procedures are likely to be undertaken in parallel. For countries where actual outbreaks have not taken place, it is recommended that eligibility databases be built as part of the emergency preparedness plans. The manner in which people have to register should be decided upon in advance and the time frame for compensation clearly communicated to farmers to solicit compliance with cull- ing requirements. To mobilize funds rapidly from central compensation funds to affected households, it would be im- portant to (i) clarify responsibilities in advance; (ii) make provincial level, cross-agency coordination arrangements; (iii) and establish local contingency funding. Multidisciplinary teams reduce the risk of conspiracy and collusion (livestock for assessing the need and reliability for culling, MOF for payment, civil authorities for security, and community leadership for transparency). Surveillance teams should be followed very closely by culling teams and payment teams (ideally together). The participation of community-based organizations, NGOs, and citizens in general has proven to be one of the most critical factors for ensuring successful accountability arrangements and the handling of grievances, and their involvement is likely reduce the risk of diversion of funds. History has shown that compensation schemes are susceptible to fraud, error, and abuse. In addition to the social accountability mechanism described above, to provide fiduciary assurance that eligible poul- try owners and only those eligible owners, are paid in full, and to reduce the risks of fraud and abuse, compensations funds should be subject to monitoring and oversight through periodic operational re- views and independent external audits. 7 Where Are We and Where Do We Go from Here? This concluding chapter starts by considering why and when com- pensation is a public good. It then takes stock of the characteristics of successful compensation programs in terms of effectively sup- porting culling for the purposes of disease control. From there, it looks at longer term issues that countries may wish to address to prepare ahead of time for implementing a compensation program and for transiting to other forms of disease control. The latter in its full sense is beyond the scope of the present exercise, but specific issues related to compensation schemes will be addressed. Compensation as an International Public Good As argued in Chapter 1, the primary rationale for treating compensa- tion as an international public good is the possibility of catastrophic international spillovers affecting human health, arising from the mutation (or more specifically reassortment) of the virus into a hu- man-to-human transmissible form. If other options for protecting human health become available (perhaps involving inexpensive and effective human vaccines from the major public-private part- nerships currently seeking to develop them), it is less obvious that compensation for culling as part of a stamping-out strategy would be supported with international finance provided on concessional terms. Most current international development funding, including the IDA funding of GPAI, is nonincremental in the sense that these resources would have been available to development activities in any case. Thus expenditure on compensation from these sources comes at the cost of foregone public investment in other areas. However, spillovers from the diseased herds or flocks in one country to healthy ones in another may still justify the international public good argument for animal disease control. Nonetheless, it is important in the pure animal disease case to examine carefully who gains and thus who should help pay. It is clear that the live- stock industry from the developed world (and thus consumers in the OECD) stand to gain from earlier containment of contagious diseases in the developing world. For example, the 2001 outbreak of FMD in the UK, which originated in the South Asian subconti- nent, caused an estimated US$5.619 billion in direct and consequen- tial losses to UK agriculture and about the same amount in other 41 42 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation UK sectors (tourism, and so forth) (Thompson et al. comes very widespread, authorities may introduce 2005). Investment from a mix of public and private preventive animal vaccination in high-risk areas sources in the OECD countries in surveillance and or as a blanket approach. As disease recedes, vac- reporting systems in developing countries would cination may be withdrawn and active surveillance have significantly reduced the probability of this initiated, with stamping out to remove the last few situation arising in the first place. cases. With HPAI, countries are at different stages The concern that sector 1 and 2 producers in and therefore the role and extent of culling are dif- livestock product­exporting developing countries ferent. have shown in promoting disease control in sectors When avian influenza first struck, speed was of 3 and 4 (or sometimes even the removal of these op- the essence to stop the spread of the disease in poul- erations from export zones) is also clear (Delgado, try and therewith to decrease the risks for human Narrod, and Tiongco 2003). The mutual interest of health; conditionality on the payment of compensa- sector 1 and 2 producers in both developed and tion was not appropriate. The discussion through- developing countries in better disease control in out this report suggests that compensation proce- sectors 3 and 4 in developing countries is likely to dures are more effective in assisting disease control become even stronger over time, as the share of live- if certain institutions or procedures are in place prior stock produced in developing countries (currently to the onset of a full-scale emergency. This illus- well over half) continues to increase steadily. This trates the importance of early lesson learning and increase is likely to continue for the foreseeable fu- knowledge transfer from countries with similar re- ture (Delgado et al. 1999). source endowments and services where compensa- In any event, protecting livestock income and the tion programs have been in operation. It also clearly assets of the poor in developing countries will re- indicates the urgency of proactive investment in main critical poverty issues for years to come. How- requisite instruments for compensation adapted to ever, once the danger to human health is taken away, the local circumstances. Finally, it raises questions the objectives of animal disease control and protect- about the appropriate stance for development assis- ing the assets of the poor are likely to involve differ- tance in relation to governments and industries that ent constituencies with imperfect overlap. Animal have not embarked on the requisite measures after disease control per se would then be primarily an is- experiencing repeated outbreaks over time. sue for national and local governments, the private sector, and producer groups. All of the above, plus domestic NGOs and development partners, would Characteristics of Good be concerned about protecting the assets of the poor, Practice in Compensation but it is not clear if promoting smallholder poultry Schemes Designed to Help production under sector 4 conditions would remain Control Disease Spread in an the chosen vector. Rehabilitation of the devastated sector 3 poultry producers of countries affected by Emergency HPAI remains a critical issue, but one separate from Good practice examples draw heavily on experience compensation for disease control. with sectors 1 and 2 in countries with established For the time being at least, strategies for dealing institutions. Yet many of the toughest problems lie with HPAI disease reservoirs in all four poultry sec- in countries where sectors 3 and 4 remain important tors will remain necessary, and compensation for or even predominate. Experience with compensa- animal culling will remain part of the basic toolkit tion schemes in sectors 3 and 4 have arguably been for reducing risks to human as well as animal health greatest in Thailand, Indonesia, Niger, and Vietnam, at both national and international levels. and the positive and negative lessons from these A longer term view requires recognition that countries have been especially useful for present control of an emerging animal disease usually goes purposes. As the disease spreads to Africa and oth- through stages of "progressive disease control." Ini- er parts of the developing world that are structur- tially, there is normally heavy reliance on stamping ally quite different from Southeast Asia, it will be out and the increase of biosecurity and movement important to continue to learn lessons from experi- controls in pursuit of rapid containment, aimed at ence in these areas and apply them in schemes more immediate eradication. If outbreaks are widespread adapted to the local areas concerned. The analysis within a zone or difficult to control, authorities may in the report suggests that success in compensation move to a modified stamping out using targeted schemes is more likely where the following condi- vaccination and limited culling. If the disease be- tions are met. Where Are We and Where Do We Go from Here? 43 Timeliness and Timeline ment needs to be spelled out, and a clear chain of command needs to be implemented based on this OIE recommends that no more than 48 hours elapse legislation. between reporting and culling as good practice Before outbreaks occur, there is also a need to es- in control of HPAI through the animal vector. Al- tablish a database of potential beneficiaries (poultry though this may be difficult to implement in many farms and holdings--see Chapters 2 and 6), decide countries, the effectiveness of the culling will de- on how simple or complex to make the categories of crease rapidly if not performed within that time animals compensated (see Chapter 3), and initiate frame, considering potential spread of the disease. procedures for monitoring reference market prices While disease control strategies per se are outside and the keeping of price records (Chapter 4). At the the remit of the present report, the urgent need for same time, communications strategy and packages rapid response underlines the need for pre-exist- need to be prepared for both disease control and ing capacity to target culling and compensation re- compensation specifically (see Chapter 5). Congru- sources immediately to the suspect farm and those ently, the mechanisms for organizing payment need immediately next door, perhaps with on the spot to be set up and tested (see Chapter 6). Institutions compensation.20 may need to be strengthened to accomplish all these Where there have not yet been outbreaks, it is tasks, and personnel trained to implement them. recommended that culling be based on polymerase Once an outbreak has occurred, the communica- chain reaction (PCR) positive results. Movement re- tions, culling, and compensation strategies need to strictions should be implemented from the onset of be rapidly implemented and monitored. After the suspicion, although in practice this will require the outbreak there will be a need for audits, evaluation, cooperation of the police, and will be in any event and lesson learning. It seems likely that much of difficult to enforce. In locations where several out- what is developed for HPAI will have other similar breaks have taken place or the disease is endemic, but distinct uses in disease control. culling should be based on clinical signs and prefer- ably on influenza type A kit positives. Because timeliness and the comprehensiveness Breadth of Coverage and Targeting of culling within target zones are critical, the time- Compensation-based incentives for compliance liness and reliability of compensation delivery are with reporting and culling are likely to fail in their key ingredients to the degree of trust between farm- objectives if payments do not reach the very large ers and culling officials. Thus an effective compen- majority of those who have had their birds culled sation scheme in terms of inducing widespread re- and also cover all major groups of producers in a sponse gets the money rapidly to the people who relatively fair manner. In particular, leaving a sig- are entitled with the minimum administrative cost nificant group out (or failing to recognize the much and leakage. To do this, the scheme needs to have greater value of their birds relative to the general a clear sense of purpose, good communication to population of poultry) is likely to be associated with stakeholders, up-to-date database of poultry farms, noncompliance and further disease transmission. and effective epidemiological targeting. Where trust This turned out to be an issue with domesticated needs reinforcing, as is often the case in develop- song birds in Vietnam, kampong chicken in Indo- ing countries, compensation payments preferably nesia, and fighting cocks in Thailand. This is par- should be paid within 24 hours after culling, and ticularly important if the enforcement of movement paid in cash. When cash payments are not immedi- restrictions is weak. ately possible, it is possible that some sort of voucher Before the disease is endemic, culling and mea- system may work, but understanding the feasibility sures to support it will presumably be targeted of this needs to be explored further. wherever necessary to eliminate all vestiges of the The repeated need for rapid response clearly es- disease. Once HPAI becomes endemic, however, the tablishes that a great deal needs to be and can be emphasis may need to be more selective. It seems done before outbreaks occur. First and foremost, logical that the density of poultry holdings close to there needs to be clear legislation that spells out the people and other farm animals is positively associ- rights and responsibilities of government, livestock ated with the danger of virus reassortment occur- value chain agents, from private vets to traders and ring. If so, the number of birds that must be culled processors, and livestock producers with respect to and thus the need for breadth of coverage in com- emergency and normal disease reporting and con- pensation strategies is also likely to be higher in trol. The overall responsibility of the central govern- such areas. This suggests that culling and thus com- 44 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation pensation will be targeted primarily to high density have a rapidly available source of funding. Coun- and peri-urban areas. tries faced with the prospect of an HPAI outbreak When flocks are more spread out, as in sector need to have preagreed pathways for the taping 4 holdings in remote areas, the need for both cull- of government contingency funds to be able to act ing and compensation may be relatively less urgent quickly. Large commercial operations will need to once the disease is endemic. The initial urgency find private sector options for hedging their disease to prevent the disease from becoming endemic no risks under HPAI as these become better known longer applies. The virus load is likely to be more (discussed below). There may also be the need for spread out and probably less overall with lower ani- development partners to explore ways to pool con- mal and human density. The latter tends to be asso- tingency reserves across regions or internationally ciated with fewer interactions among animals and to lower the opportunity cost of individual coun- with people, and less trade in potentially infected tries each having to hold adequate funds. birds, meat, and eggs. Flexible, Simple, and Consistent and Useful Reliable and Adequate Incentives for Com- for Other Purposes pliance The literature surveyed and key correspondents The literature examined and field visits clearly show stressed the need for simplicity and consistency in that compensation rates of less than 50 percent of the schemes implemented and also that the opera- market prices do not elicit sufficient compliance to tional details need to be thought out very carefully avoid significant leakages, and that rates of the or- since what is simple in one system may not be in der of 75 to 100 percent of preoutbreak local market another. In particular, it should not be assumed that prices, where feasible, elicit high compliance. poor rural people know anything about HPAI or its People also have to be aware of the compensation risks before an outbreak occurs. Thus communica- scheme, how it works, and believe in its integrity. tions play an educational role in addition to diffus- Chapter 5 discussed some of the key communica- ing information of rates and procedures. Trust is tions issues. an essential ingredient, and it will be necessary for dealing with both the present emergency and the next major animal or human health scare. Effectively Mobilizes Institutional Assets of the Country in Question The literature and field visits reveal that even coun- Changes in the Structural Context tries within the same region have very different levels under Which of institutional development for dealing with culling Compensation Is Occurring and compensation issues. Successful compensation delivery requires mobilizing local structures such as Following on the arguments of the previous section, producer associations, municipal/county govern- it will be vital to develop criteria for assessment of ment, and traditional leadership structures. Local when widespread compensation associated with technical expertise is also required, especially for cer- stamping out will lose effectiveness as a disease tification. The existence of functioning animal health control mechanism, as the disease becomes endemic services is critical, where possible based on public- in parts of Southeast Asia and parts of Africa. This private partnerships and laboratory and field diag- will help identify when to shift disease control re- nostic capacity. Over time, countries that are likely to sources from compensation schemes per se to lon- need to continue to deal with HPAI outbreaks, wheth- ger-term disease control efforts such as vaccination er through culling and compensation or other means, and surveillance (although when this should occur will need to invest in this area if funds invested in and the design issues of these longer-term strategies compensation are to have any lasting return. Chap- are beyond the scope of the present paper). ter 6 discusses the issues in organizing payment. Longer term, there is clearly the need to strike the most effective balance in financial and human resource use between short-run compensation Effectively Mobilizes Financial schemes for eliciting more accurate reporting of an Resources immediate outbreak and compliance with culling The need for rapid response and hence for prear- initiatives versus improvement in longer-run so- ranged responses also means that there is a need to lutions, such as incentive systems for surveillance Where Are We and Where Do We Go from Here? 45 and early alerts. As the disease becomes endemic in used to control serious animal disease epidemics. parts of Southeast Asia and Africa, longer-term in- Biosecurity requires communal and not just indi- stitutional solutions will be necessary. vidual compliance; hence changes here require sys- While much of this is outside the scope of the temic change. present exercise, enhancing the long-run institu- From the standpoint of public policy, the division tional framework and incentives for community of labor between the provision of national public animal and human health workers and private vet- goods and private goods in animal health services erinary and human health agents to better commu- is the key issue, closely followed by the sharing of nicate disease risks and compliance incentives to costs in proportion to benefits. Where sectors 1 and producers, and for reporting suspicious events back 2 are predominant, the contribution of the private to animal health authorities, will be critically linked sector to these costs is likely to be higher. This is less both to the immediate needs for implementation realistic where sector 3 and especially sector 4 ac- of compensation strategies and to any longer run count for a large share of production. In either case, strategies that may be contemplated. It might there- it is clearly necessary to revitalize the animal health fore be appropriate to expect countries to establish funding and delivery system, in particular private- appropriate procedures and institutions as soon as public partnerships in most developing countries possible, and eventually to make this a precondition affected by HPAI. for further support in international funding of com- Over time, expectations of assistance from inter- pensation. national funding agencies should be viewed in part OIE and FAO are in the process of developing a in light of what countries are doing in this regard. revised strategy for dealing with transiting to vacci- The performance, vision, and strategy (PVS) systems nation for the control of HPAI in endemic countries, audit tool for veterinary services being developed sometimes referred to as including a "vaccination by the OIE provides a means to diagnose needs and exit strategy." When to decide the use of vaccination measure progress in this regard. Compliance with and stamping out is a very complex debate. In poor the main standards of PVS can be expected to form countries, in the majority of cases, the best solution the basis for continued international financial sup- to control HPAI where it is endemic is a mix of cull- port for compensation. ing the diseased animals and vaccination. There is greater emphasis on vaccination as the disease Over Time, What Should the Public Role Be spreads more widely. In the case of epizootics, all in Compensation for infected animals have to be culled. Infected animals Sectors 3 and 4? should not be vaccinated. Vaccination was a key component in the control of the disease in Vietnam. A key longer-run issue--and one whose subtleties With vaccination in any situation, there is a need for extend beyond the boundaries of this report--lies an exit strategy when the number of outbreaks de- in the issue of what to do about sectors 3 and 4. An- cline, so that remaining disease manifests itself and ecdotal but widespread reports in Southeast Asia stamping out can then work to eradicate the disease suggest that sector 3 has shrunk in those countries pool. experiencing significant problems with HPAI. On the other hand, sector 4 appears to be surviving, but largely out of the control of public authorities. The Future of Compensation in Stricter controls, and the introduction of biosecurity the Context of the Future of the measures in sector 4 such as caging, will not only Poultry Sector increase their costs, but may also cause them to lose preferential prices in special niche markets they of- ten now supply to the extent that taste and other The Urgency of Improved Biosecurity versus factors associated with birds produced the old fash- the Viability of Small-Scale ioned way are lost. In developing countries, volun- Production tary insurance or other private insurance systems need to be taken into account although they will A compelling need for improved biosecurity of need some time to develop. poultry production units and markets is increasing- Decisions about how and what to compensate ly clear in the context of "progressive disease con- may affect the flexibility of shaping the future in trol," the name given by veterinarians to the cycle poultry systems. Cash compensation allows people of culling, vaccination, and stamping out typically to decide whether they use the money to move out 46 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation of poultry or not. Restocking forces them back in; es (SMEs), and this is the most common approach in and compensation combined with quality control other OECD countries. Once the emergency human or good behavior requirements would help some health issue is removed, and risks can be better as- people to upgrade. sessed, private insurance and risk-pooling schemes Longer run, it will be difficult to dissociate the clearly need to share the costs of culling and com- design of compensation schemes from other, more pensating producers in these commercial sectors, as structural activities and investments designed to already happens in the OECD countries. Compensa- reinforce the biosecurity of the industry. As noted tion however will remain necessary for many years above, associating compensation payments directly to address the early eradication of outbreaks and to with directed rehabilitation efforts to move produc- avoid the spread of transmissible animal diseases. ers into different agricultural livelihoods technically This activity will remain as a public good, including could be construed as a violation of the World Trade in sectors 1 and 2, even if more private sector inter- Organization (WTO) Agreement on Agriculture vention is expected in these sectors. (AoA), although it is hard to imagine that this inter- pretation would ever be adopted.21 A Role for an International Funding Facility? Before seeking to fundamentally redesign or re- locate smallholder farming systems in rural areas of However, in poor countries budget constraints and the poorer developing countries for disease control the predominance of sectors 3 and 4 raise the issue purposes, there is a need to train livestock owners of whether an international support mechanism for and private veterinarians/paravets in disease con- national compensation schemes should be part of trol issues in remote areas. Incentives for vets and the global institutional infrastructure in the fight paravets to go to those areas and participate in HPAI against HPAI and other emerging zoonoses.22 Such control are also needed. All investments of this type a facility would provide fast disbursing supplemen- regarding HPAI control in developing countries tary funding to governments for compensation to would also be beneficial for controlling other animal livestock farmers in the event of an outbreak. While diseases of zoonotic or economic importance. resources for compensation will continue to be in- cluded for some time as part of--or in association with--country programs funded by the World Bank Over Time, What Should Be the Public under the GPAI, outbreaks are likely to continue Sector Role toward Compensation in to occur over a multiyear period. Consequently, it Sectors 1 and 2? might be appropriate to develop a facility that could Current policies for compensation to sectors 1 and 2 provide support over the 10-year period envisaged vary. For example from the countries covered by the under the global strategy for HPAI eradication. The field studies, Indonesia does not compensate sector implementation issues involved in this concept go 1 and 2 producers, whereas Egypt only compen- beyond the scope of the present paper, but are being sates large farms. The new EU regulations would discussed elsewhere. also compensate only small and medium enterpris- Where Are We and Where Do We Go from Here? 47 Conclusions and Recommendations from Chapter 7 While over time the international public good argument regarding the risk of human-to-human trans- mission of HPAI might diminish, transmission between animal populations of different countries will continue to be a main reason for international funding of disease control in developing countries. More- over, in the likely event of the disease becoming endemic within certain countries, this will have major effect on the poor, and interventions under those conditions therefore deserve international support from an equity perspective. Stricter disease control requirements will have a major effect on the struc- ture of the industry, with particular implications still to be clearly identified for the future viability of the sectors 3 and 4. Nonetheless, compensation will remain necessary for many years to address the early eradication of outbreaks and avoid spread of transmissible animal diseases. Under such condi- tions, compensation will: · Become part of modified stamping-out strategies, with probably a lower priority to culling. Clear principles of how stamping-out strategies should evolve, and how compensation fits into such evolv- ing strategies are needed. · Have to become more dependent on the countries proven political will to improve the key institu- tions for animal health, in particular for early alerts and independent disease reporting. The OIE tool PVS is a useful instrument for assessing government capabilities. · Be restricted to sectors 3 and 4, and be funded from a mixture of national and international public funds, the latter in particular for the poorer countries. · Be funded for the large commercial sectors through private initiatives, probably as a mix between mandatory levies and voluntary insurance; in many cases the public sector needs to work with the private sector to find equitable ways to develop these systems. Appendix 1. Examples of Compensation Schemes for Culling under Animal Disease Outbreaks in Selected Countries 49 50 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation be an who to valu- value. es- the ds is by by animal. or government (veterinarians), certain boar either animals appraiser" ed the the of and below oduce Pricing State-appointed ers officials if Pr Compensation tablished "official values slaughter weight - fer the and TSKs dif 2) assets last govern- indus- contri- to) ee annual evenuer by govern- of by (or fee; govern- 3) financial and compulsory fund. industry govern- industry govern- 80% of thr 1) % Countries made government omfr Fully 80 20% 50% 50% 20% and omfr ces: omfr funded with, grants; funding 1: 2: 3: 4: sour Funding 50% 50% insurance Cat ment Cat ment, Cat ment, Cat ment, try Financing butions come ent membership state coming investments held. Wholly industry ment esort.r Selected e-r - in for for ani- vac- culling mar but costs. the es most move- culling, market. eaks value to enderingr labora- the diseased nothing cleansing, farm-gate govern- market mass of ee the healthy of for and vet, comparable at measur by omfr the and animals. due eflectingr of of including of for 50% Outbr market expenses, livestock estrictions.r compensation casses, compensation disinfection value dead Level Full losses disposal car cination tory no private or Disease-fr price, value animals cent Costs imposed ment, esultingr ment Full (100% value) mals, ket animals, for Disease Fund al. Fund et Animal maker Disease Health (Horst under Decision Animal (TSK) 1999) etAIDV Animal B Culling but dis- orf by diseases diseases epidem- List state, A CSF) scab) and 2002) List decided Nonendemic ariantV A FMD) Unknown (AI, Known be federal 1: 2: 3: 4: List (sheep Schemes Diseases oT the mostly Cat (rabies) Cat (BSE, Cat eases Cat ics OIE (Whiting OIE A poten- in- faloes; List with and and OIE diseases species sheep species B Compensation infected diseases cattle/buf domestic with A animals List of Animals Multiple tially List Pigs; poultry; goats; wild Multiple fected and Examples 1. the Appendix Country Germany Australia Netherlands, Appendix 1. 51 health ) animal oups. Pricing Farmer gr continued( for estr by other by health cost fully cent for cent, private exists. per others Countries fund. per states; also 55 animal with 50 the oups. Funding Government FMD, government diseases, farmer gr Disaster USDA omfr sharing industry Selected - in also and if had per fixed , loss per 100 for for 3 75% Under firm. to limited market owers eaks FMD, unit they layer, subsidy to AI. Not of verti- gr up culling, earned house gmeier value, and only consequential per egg) est up HP the estimated oiler for cent depopulated Ber compensation what have of (br inter estocking.r and appraised for Outbr gency per for income. integrated to contract poultry been and eeding income, the cent 50 Level Culling includes losses. 90% slaughter amounts day br of cent for 50%, of value emer per disinfection. lost Compensation to value cally The eceiver equal would their not (Ott 2005). Disease states animal oups of gr then Animal maker with e peer and under Decision Minagric health EU/Ministry Agricultur USDA Culling orf AI Schemes Diseases FMD AI HP ds ds Compensation of Animals Pigs Poultry/bir Poultry/bir Examples 1. States Appendix Country France Belgium United 52 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation of eak ds ds ds due culled ol culled ol out es of bir of bir bir and eoutbr stamping stamping contr contr ds pr to to measur Pricing ) on value value to value to culled bir ol due infected es due infected es of stamping ds of due ds of due to Based market Market bir out and measur Market bir out and measur alueV contr due infected to continued( a ties, estock-r of billion amount to VND) activi government million); costs 268 Countries Funding billion ($17.2 central allocated (10 veterinary The budgeted VND considerable was ing and disinfection, Selected or ds in at ce no bir of on eak so state- com- set e is $1.90) For is is, culled, class ge ar but e for egula-r (Bush poultry and for e-Cinna- eaks d outbr d farmers, (2) Level (US askT of lar eceivingr poultry eportedlyr ther governors. for bir e compen- payment; level depends (that of by the bir Influenza farms ar naturally government (1) per and compensation enterprises (Rivier ent, ovincial of and 2005). Outbr naira cial being die 80% set compensation vian espective ovincial fer pr culled Compensation 250 (A echnicalT 80% oducers 2006) irr age. Owners mer eportedlyr AO/OIE/WHO compensation, small-scale owners not sated, compensation that H5N1. Central pays pr dif the tions (F 2006). Owner is per 2006). woT policies: pr households, cooperatives, forth); owned (SOEs) mond Disease of maker state Animal committee and Decision under Mixed federal Government Government Culling orf us) Diseases vir (2006) (2006) (2004) AI AI AI AI Schemes HP HP HP HP (H5N1 ds ds ds ds Animals Compensation of Poultry/bir Poultry/bir Poultry/bir Poultry/bir Examples 1. Appendix Country Nigeria China Ethiopia ietnamV Appendix 1. 53 Pricing ) continued( e of ect eak billion sector ect ar VND/ the ough VND/ rate the gov- govern levels poultry ecoverr e-r indir a forth) (13 Dir of thr to eleasedr for number at during outbr so ovided equipment, e: 5000 ease contingency 2000 e ar ovinces oduction. ectly AI the disinfectants, clothing, pr central budget. Countries Funding forth poultry of level of incr pr the culled; VND/head culled of equipment, and and Central Pr dir quarantine be subsidy d estockingr so ($0.32) to local ($0.13) amount be to ol after is, 3000 inf the otective labor and VND) ment towar ecoveryr subsidy head culled. able subsidy their funds; subsidy head poultry The will lated animals expenditur of ($0.19) contr and (that facilities, pr staf stations, should omfr ernment Selected ed for at AI of in 10 to in as value and the d is the omfr and the 2004 number value, 50%. of the any 50% calcula- sup- only market VND). oducers, olling Noi e paying out- eaks calculated pr compensa- missing national aim should by cities omfr towar oducers' e level the the culled consider market constraints come the 50% Ha cities contingency wher Level pr to disbursement The was the is performed the contr In rates; will exceeds wer local compensation for of government market support of [[Q: estr Minh eceiver government, eak (the allow 100,000 e Outbr the and during layer was local ol full end poultry guiding ar for ovided The Chi not the animals the 15% a be not can ds]]: eak. pr ovinces; ovinces Poultry losses at elationr of per tion of funds port outbr to value of to Central budgetary do the but SOE the br For the tion wor government contribute costs AI. be pr Ho will contribution central budget their budgets; pr contribution contr Disease maker Animal Decision under Culling orf Diseases Schemes Animals Compensation of Examples 1. (continued) Appendix Country ietnamV 54 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Pricing ) continued( Countries Funding e Selected ar as in rate to eak gov- eggs com- sup- e baht 20 oiler oyed. lose pay- for which the e-Cin- eadyr ence a farms ar the phases. farms 40 br for support e farms. eaks central will outbr Hinrichs of by is and destr they ar fer element. payment culling to an two per second arranged Level contingency compensation, their compensa- the dif National a Rivier Contingency oduced culling 2/3 and is their out whose in out, been when The the includes e layer payment Outbr local the meant intr when initial after farmers per ($0.50) as had initial is the budget, government port omfr about depopulated Budget fund. Compensation ment estockingr Recently was welfar is used stamp (McLeod, namond, 2006). e estockr Farmers ar compensated ernment The right stamped ($1) baht well that The tion farmers income. pensation when to Disease maker Animal Decision under Government Culling orf us) Diseases vir (2004) AI Schemes HP (H5N1 ds Animals Compensation of Poultry/bir Examples 1. (continued) Appendix Country ietnamV Thailand Appendix 1. 55 ds culled ol of bir stamping contr to Pricing value to ) due infected es. ds of due Market bir out and measur continued( by Animal (Animal of Act). Countries Funding compensation Laws 75% the Epidemics Epidemic Selected the - in ds be- If the pay The. to as as ($3.5) than ely oces- bir inter poultry per price, owers pr loss e cent raised value the a poul- not rar gr e of eaks or will baht oiler flock. cash, br baht equal per is the indepen- Level choose ($2.5) 20 mor is omfr cycle the market 100 hatcheries. futur efer per integrated States, ds can cash 140 and oducers omfr life Outbr pr baht of to layer Canadian contract bir start slightly industry pr and to income They tween to they government 100 layer ($0.50) total per or average equal compensation. The try highly United have and their dently sors Compensation included of depopulation due uption.r . Disease on leks 2,500 under pay- (US$15) turkey na- maker sets each and Animals leks the leks) the of Animal 400­700 for (depending for 100 2006). by b of goose = legislation Decision scheme 1,500 the Health (1990) US$ ovided under The compensation ments (US$4­7) chicken size) for (US$25) (1 (Ahmed Pr tional the Act Culling orf Diseases (2006) (2004) AI AI Schemes HP HP ds ds Animals Compensation of Poultry/bir Poultry/bir ) Examples 1. continued( Appendix Country Thailand Albania Canada 56 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation prices oduction market pr market Pricing ) prices. on on and smallholders. Based prices. Based costs for Market continued( at - Bud- ec- , of easury)tr Dir easuryrT of omfr for la (CN- held Inter National e e be Committee advice Pathogenic Countries Funding ection easuryrT collaboration MoA contr Livestock will viairA Dir the National National Influenza) (national of . disbursement. close collaboration Commité . Lutte Highly MoF get in with tion (technical). MoF in MoLivestock Funds MoF echnicalT the de Grippe LGA, ministerial on vianA fund National MoF Selected - of in any e tur e = the ar = $2.7; and = chick ar price of price. price, spot of includ- set e= goose $19.5; since had ent and set ar chick $13.6; = $3.6; pea- ($3.9); = eaks 70% the days = and ostrich= not Level Government par pigeon chicken on category oiler $2.7; 15 goose=$45.5; market market market duck category turkey $77.9; Outbr of and) price oducers eak. eak. talks. br; chicks $4.6;traditional = traditional fowl duck; c tentative have of of declaration pr d and e in each than follows: each $0.36; follows: $7.8; 50% ($2.8 market still they outbr 80% 75% decided the outbr and ed Compensation for as $12.7 turkey layer chicken= less $0.91; = guinea key=$27.3; "caille"=$0.91; cock ostrich=$363.6. Compensation for as $1.95 = emu= $155.8. Disease e Live- and maker Livestock Animal and of Services Animal agricultur e of of Planning Decision oduction under Minister Ministry Ministry Pr Fisheries Department stock Monitoring Culling CBPP orf system with Diseases same Rinderpest ASF unsuccessful as but and (but Schemes AI AI AI, used AI experiences ASF compensation) ds ds ds ds Animals Compensation of Poultry/bir Poultry/bir Poultry/bir Poultry/bir Examples 1. e d'Ivoir Appendix Country Mauritania Senegal Côte Nigeria Appendix 1. 57 costs. oduction Pricing pr ) negotiations farmers. hoc oduction Poultry costs. Pr Ad with continued( and asso- health. eteri-V line of Animal taxes donor animal Countries Funding to Fund. budget Services External (Russia). MoF earmarked ciated Department nary Health Selected 3 e or os the in for os age: mor 13 For for 18 o- it over set wks= to eur per eur Re- that by wk or $2.54; wks= $13.39; set to 6 3 wks 6 =$9.45; 9 hen; 15%. catego- eaks 1 10 was wks=$1.85; doves chicks; turkeys. prices up e 0.7 a 4 stock: wk= wks= wks=$14.55. the egg. latter Level wks=$1.27; 1 wks e old given chicken, ($15.9) egg by ent 7 10 end-of-pr and oilers: per f 2; $3.46; wks=$5.77; laying and e wer the mos.=$2.31. hens Outbr category br par mos.=$5.77; mos.=$6.93; mos.=$9.24; mos.=$13.86; 4 mor per os per e chicken, ducks=$2.31. following Day wer mentioned wks=$2.31; wks= wks=$6.93; wks=$10.85; or eur ding Compensation each For =$1.04 wks=$1.5; 5 wks=$2.54. For 1­2 2­3 3­6 6­12 mor For and turkeys: 2 $4.62; 5 =$8.08; 8 $12.01; 11 Compensation the ries: laying weeks; duction pigeons; Generally that farmers ($7.9) 20 pigeon, ($0.56) gar was price estimated Disease and Ag- and of eteri-V maker Agency estry of Animal eterinaryV For e, Palestinian Service Ministry Development Services Decision the under MoA Authority Kosovo Food in ricultur Rural Department nary for Culling used orf be Diseases may diseases but Schemes AI AI AI, other ds ds ds Animals Compensation of Poultry/bir Poultry/bir Poultry/bir Examples Gaza 1. and Bank est Appendix Country W Strip Kosovo Serbia 58 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation of and number funds culled. Pricing negotiation be ) farmers. to hoc estimate ds Ad with vailableA an bir continued( of Countries Funding Ministries Entities Finance. Selected is e in units due h con- 30 No small d ds eas not of as for - a ar and 50% as cial culling authori- $0.87 rate still BSE, pigs 2003). geese for bir the ofit is loss oduction. culosis. losses 2005b). losses mar welfar eaks of eceivesr by over old; may as ofit pr such compensa- the Level omfr for between pr on same and pr was backyar ect the or (for in salmonella and, of of edith chicken. rate days access). dir of arising movement commer compensated a $0.5 ounding of old; and farmer ence farm CSF (DEFRA of Outbr per ge e at chicken 50 ducks may compensation a paratuber culled diseases for ucted (Mer fer value g losses animals actual expected compensation surr calculated the case 100% ounds $5 Lar wer to of ties per days for over compensation scale farms; in that be market The that is dif the the if engaged Compensation in and For FMD, the consequential 100% Payment tion at ket destr gr esultr olstr Disease Ministry maker the Animal eterinaryV Committee by Decision eme Health under Entities Department Supr headed of Government Government - Culling and, orf CSF paratuber Diseases FMD, (2001) Schemes AI AI Salmonella, culosis, BSE FMD faloes ds ds Animals Compensation cattle/buf of Poultry/bir Poultry/bir Pigs, Pigs Examples 1. and Kingdom Appendix Country Bosnia Herzegovina Egypt Sweden United Appendix 1. 59 ces - ani- of sour other the . the of deter of and 2005b). is rangea eed, Pricing value value rate ) immediately br slaughter e using information (DEFRA fixed age, Market animal befor The mined market including mal, factors continued( by (by and Agricul- of Countries Funding insurance subsidized Fisheries e, government Ministry tur Food Private sector the 37­43%) Selected to it ed for in the if the of of ds time the is per up oyed to ani- cases pay- pay- bir at market e was market at is even Animal that with is the the dead eak time for fected 2005a). for govern- rate eaks compen- 75% market depend- compen- value payable destr the other of at payable or full the 1981 market ds af Compen-. the Level for slaughter but was Full developed infected all the bir the outbr fected . fixed by of average was exposur half not not in the Act af at 100% value a livestock. of is slaughter an at for e disease (DEFRA at of Outbr market on animal to not for under not at ar of for maximum was e slaughter diseased ds Payment sation animals the a ing eturns.r sation any due infection, had disease. Compensation paid mals value; it value. Compensation able Health 100% value ar disease slaughter Compensation able market that with of sation for bir Compensation animal time paid ment head Disease Act be to of 2002; to - under in maker need ead Health wher a spr is Animal animals ed e the insurance amended ther diseases Decision legislation Animal allow event under EU the 1981, to slaughter ever pr these Private sector TB af- Culling No- disease orf on AI eaks species bovine the 1962 Disease, HP Rhinitis on Diseases 27, outbr ols evokedr bovine ucellosis ophic e FMD,, Schemes Br (1996) Atr (1954) Contr wer vember Newcastle CSF Disease fecting ds faloes faloes Animals Compensation poultry/bir of Cattle/buf Pigs Pigs, Cattle/buf Examples 1. States Kingdom Kingdom Member Appendix Country United United EU Spain 60 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation Table Notes a. http://www.nap.edu/catalog/11150.html. "The Threat of Pandemic Influenza: Are We Ready? Workshop Sum- mary." b. http://laws.justice.gc.ca/en/H-3.3/text.html. c. 1 USD=271.30 UM (Ouguiya). d. 1 USD = 550 FCFA. e. 1 USD = 128.35 Naira. f. 1USD = 4.33 NIS. g. 1 USD=2 KM (Konvertible Mark). h. 1 USD = 5.74 Egyptian pounds (October 2006). Appendix 2. Four Main Types of Poultry Production Systems Fou Industrial and Commercial Village or back yard integrated High Low biosecurity biosecurity Characteristics Sector 1 Sector 2 Sector 3 Sector 4 Biosecurity High Mod-high Mostly Low Low Market outputs Export and urban Urban/rural Live urban/ Rural/urban rural Use of purchased inputs High High High Low Dependence on good roads High High High Low Location Near capital and Near capital Smaller Everywhere; major cities and major cities towns and dominates in remote rural areas areas Birds kept Indoors Indoors Indoors/ Outdoors most of the Part-time day outdoors Shed Closed Closed Closed/open Open Contact with other chicken None None Yes Yes Contact with ducks None None Yes Yes Contact with other domestic None None Yes Yes birds Contact with wildlife None None Yes Yes Veterinary service other than in Own veterinarian Pays for Pays for Irregular, depends on epizootic disease control veterinary veterinary government services service service Source of medicine and vaccine Company or Market Market Government and market market Source of technical information Company and Sellers of Sellers of Government and associated inputs inputs extension Source of finance Banks and own Banks and own Banks and Private and banks private1 Breed of poultry Commercial Commercial Commercial Native Food security of owner High Ok Ok From ok to bad Source: Adapted from Dolbert, GuerneBleich, and McLeod (2005). 61 Appendix 3. Avian Influenza Projects Approved under the GPAI¹ Countries listed had approved GPAI funding as of Sept. 8, 2006, based on World Bank Project Approval Documents and technical annexes of the respective projects. Azerbaijan was excluded be- cause of the use of a different funding instrument with noncom- parable information (Technical Assistance Loan). Projects included in first half of table: Albania, Armenia, Geor- gia, Kyrgyz Republic, Lao PDR, Moldova, and Nigeria. Projects included in second half of table: Romania, Tajikistan, Turkey, Vietnam (Phase I), and West Bank and Gaza. 63 64 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation e- be om AI cost (fr oj- HP ements ocur addi- for pr pr for in of would livestock manage- for million exclusively planned. equirr ganization financial by is or d eaks); scheme units, arrangements, and Bank a staffing ovisions Nigeria US$9.62 the earmarked outbr tion sharing farmers Active 06/22/2006 Standar covering and gram ment pr ment management sufficient. om AI cost (fr oject HP addi- for Pr IDA. for in livestock and a Manual to million exclusively planned. of by is eaks); scheme Bank a eparation Moldova US$9.62 the earmarked outbr tion sharing farmers Active 09/12/2006 Pr adoption Operations acceptable a has key an the e- in (iv) to the first be of well orld ef- than of (gov- by of the of to and [PIP], cofi- (Bank); work W as meet the oject M&E (spe- ocur and selection NAHICO Manual Manuals, IDA; the for Pr needed pr with Guidelines; eements ecipientr Facility other fective for oved Imple- to and the and in financial Plan Financial management (v) million ef omfr the annual the for adoption agr PHRD PDR million engthening and funding, oject ement satisfactory AH1 yet of appr (ii) contracting DLFNAF dance and fectiveness grant. The str the Pr establishment the ogram ocur the signed e conditions ef Lao US$1 US$0.5 ernment) Active Not (i) pr year been IDA; and consultants for fiduciary functions and cifically ment management), financed Bank accor Consultant (iii) Operational (or mentation including Management Pr acceptable the financial system IDA; nancing between and as ar all fectiveness, the IDA the oject, by Bank; ed the the for Pr Opera- satisfac- by (ii) IDA, to Republic Association, epar the ($0.23, oject pr and of adopted AHIF) Pr the ojgram Manual, to pr been adopted year been The ecipient.r Kyrgyz US$0.35 $0.12, Active 07/10/2006 (i) tions tory has and ecipientr work first satisfactory has the om (fr AI GP million Bank) the Georgia US$1.4 the Active 08/08/2006 None to ad- under has of and the head vianA e-r (c) the with ence been edvo ecipient.r om the for etariat (b) appointed satisfac- Bank; (fr ecipientr -Ministerial eferr Operational satisfactory has the Secr has Component of the by dinators to The oject the Inter Bank, Appr oject Pr Armenia US$0.75 Bank) Active 09/05/2006 (a) appointed of the Committee Influenza; cipient Pr Coor terms experience tory a Manual, the opted ojects in- (c) has other for to and and Pr no the all of by (only oject, to has the Plan, the ed the has and ece- right been fective- Pr pr about (b) to adopted onmental eement and ef the Bank; stakeholder Annual ogram year by satisfactory the epar Operational its to have Association, Recipient it million Pr ecipient;r cofinancing agr ed withdrawals the of pr adopted executed The first implementa- been to or ork oject the the Envir ecipient;r the the Influenza Albania US$2 omfr formation internal contribution) Active 10/16/2006 (a) W the the tion satisfactory Association, been adopted ecipient;r Pr Manual, to has by the Management acceptable Association, been the (d) grant been deliver conditions dent ness of make under fullfilled. vian A 3. compen- the date of fund Country alueV fective fectiveness Appendix sation Status Ef Ef conditions Appendix 3. 65 Nigeria None $10 an Plan IDA; forth dance Health, of to and set the legisla- accor es and Component onmental Component in Operations establishment Compensation criteria For eparation For a ocedur the Moldova 1. 1--Animal pr Envir Management satisfactory 2. 1C, of Fund with pr in Manual ecipient'sr tion. None a a the oce- Pilot of of manual and pr will es and Compensa- for access to ch acceptable IDA, PDR the Fund, es condition eparation ocedur the a Lao Pr pr for tion manual dur Resear Fund, to be disbursement. None es (ii) ed. es Plan, the ed by es has and and gency and Com- orks-- to Im- ogram Fund epar Republic satisfactory adopted W onmental influenza declar pr pr expenditur Category Association, ecipient;r emer Category Category Goods ecipientr adopted well-defined edness ) been a For the the expenditur Envir ecipient;r expenditur avian been the been epar Kyrgyz (i) under (5)--Compensation Fund--the pensation Manual, to has by for under (2)--Civil the Management satisfactory Association, been the (iii) under (6)--Eligible ported Commodities--a national on has by and pr esponser has $0.30 es- continued( ol on the satis- Bank; cull- opri- - the oject the and system IDA MoL- com- es, and ar and AI of for pr (i) and ap- Manuals com- to contr oject financial ement a the oject adopted for and for adoption systems appr pr manual GP the be: pr disburse- have ocur to A condition the ocedur funds dinators pr (ii) been is compensation describes pr of the MAF a internal Georgia Conditions dusbursements under would MoLHSA MAF pointed coor tablished management and arrangements factory and Operations have by HSA. ment funding pensation ing of funding satisfactory that pensation and including ate mechanisms documented rangements flow documents. None to under (i) in to c) in to con- is on- the Com- Fund es ad- forth the the to and sub- com- criteria the edvo Envir Animal by the that:e in set condi- ecipientr the been ecipient;r es cofinanc- ucturing beinge dance forth for compo- AI an ar ocedur with poultry that imple- and nationala the for Compensa- Manual; ar set the of Fund is accor Operational disburse-a on ecoveryr Disbursement established satisfactory (ii) Pr satisfactory has the payments made the es the Restr and in es d) ed Imports well-defineda satisfactory for component Management by ocedur that oject Appr disbursement satisfactory b) dance Compensation ojects condition adoption Compensation been Bank; Bank, (iii) Fund pr for ucturing criteria grants is Pr declar gency gency A the Bank. ocedur disbursement ocedur ogram Armenia a) dition Health the ecipientr mental Plan Bank; conditions pensation component the has mannera beinge the pensation Manual, the opted and tion ar accor and in Pr A tion estrr ing Poultry Subpr selected mented with pr the Manual; ment Critical nent has emer adopted emer pr the $0.30 ojects .CV to of by in in the Pr shall posi- the to eement, vianA ecipi-r for under any insti- other egate any been grant enced by expen- (ii) (iii) for Eligible Imports the 2 national Section Agr on the ecoveryr finance Asso- which interna- finance aggr eligible without for in a financed financed efer has amount by well-defined satisfactory adopted agency to the to and an oval for in (i) a or Association of list supplied financing or has equivalent another of the specified es gency list gency ed gency Association, eed eed appr withdrawal Influenza made Schedule and been ecipient;r the have edit; of ogram, the contract agr which agr cr financing above-r Albania No be ditur Emer included tive of Financing unless: emer Influenza declar ent emer pr to has the goods a national tional tution than shall or or ciation or under or excess amount 50% the category imports the positive prior Association. None vian A 3. to millions) in (total Appendix Country Disbursement conditions Disbursements date 66 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation e a ove has com- to de- ar and and, M&E and be no will appr seed submitted associa- LGD including health and compensa- fund liveli- to activities economi- or animal including services or undertake invest- governement and community (smallholder estockingr to (LGD) The human, farmers officer . yet to services) policy vulnerable little een oposals the animal established officers, community support new oups Nigeria NA Local desk multistakeholder committee scr compensation pr by thematic tions. 3 an officer health a officer National tion pensation be levels termined; to cally gr poultry with access health planned advisory for ments, activities money alternative hood. TBD - the - di- as and for the of eps(r fund etailr e by daily ence for fund under deter culled type ar by Statisti- 75% market govt. Agricultur manage Extraor eterinaryV private of compen- prices and apply chicken eferr each ovided; for of meat months (w/assistance the an eau culling; Anti-Epidemic local society) loss established; to of pr applied 2 State ces published collected e National PMU) be Bur assessed Moldova None MoA omfr al fund; nary Commission omfr ds. whole basis eimburser civil the Inspectorate mine bir Compensation to govt. price of a sation sour poultry CPI the cal data CAMIB--a company; prices about befor compensation to the value. TBD (i) ent and imple- oad AD)P (ii) (iii) ence ent fer br (Ap- of ds; principles 11 opose: eferr fer dif egistrationr pr price; bir dif for PDR during of in payments, forth. Lao None TBD TBD mentation; guiding developed pendix which picking market setting prices types speed and so TBD be e- for pr fund; price cost; ence will market of compen- easonable compen- weeks month Republic Implemen- eferr decision national hens poultry the poultry month culling date (Agricultural Unit)--no the for market espectiver medium ge prices on d the of ed. four lar the ) ojects the laying the poultry thir which ithin Kyrgyz NA MoA Pr tation specific about maker sation Establish compensation smallholders--75% of of in oblast; and owners--r compensation all sation based price the ceding in occurr W omfr culling. continued( the for first minis- animal the oject AI month. eterinary the espon-r specific the about pr GP of be maker of compo- one for ence during the will ithin Georgia None MoA--V official try sible health nenet--no eferr decision compensation TBD months implementation. W be e- under paid for pr com- in marz cost; edvo will be culling price will market culling of weeks the to the Com- Fund compen- month hens poultry easonable the the medium ge poultry month date Livestock on prices d the four d. established; market on of ed. lar the Appr be the laying espectiver poultry thir which ithin Armenia NA MoA Department determine pensation based ecorr National pensation to smallholders--75% of of the center; and owners--r compensation all sation based price the ceding in occurr W omfr culling. ojects - all to on - d Pr Ag- epr of e ector epr veteri- value Fund oduc- thir of pr cost; of ector which govt., the value; place. days based Dir animals. dir the in eceding e ectorate cial eportedr compensa- date took Regional Commission local egionalr 7­15 dir established; easonable agricultur pr market prices the price Influenza the during month Albania None MoA; ricultur ates; comprising omfr veterinarian, omfr culled be ithin nary determine of Compensation to farmers--100% the commer ers--r eplacementr poultry tion the by statistical ate month the culling W omfr culling. vian A 3. - level ar and for maker compensation only frame Appendix Country Ditto, fund Decision Institutional rangement compensation imeT eimbursementr Appendix 3. 67 - a ar oject of fund, terms the fund. Animal (1988) an steps in technical develop for for to Act other ovide existing no pr ovides developing implementation Nigeria TBD heT availablee Disease pr establishment compensation but ar of implementation rangements--pr will assistance the arrangement compensation of on and for oject Moldo- pr neces- devel- of based Contingen- Insurance all details be on operational to during (2003) Plan; compensation Moldova TBD Law Republic va National cy sary financial the fund oped implementation. in of the pay- e-r ol of ani- Lao made oduc- in PM be Pr ee 2005); Contr ding ol the Al 2004). to Decr PDR Regulation Management egarr contr (May of der ding Lao Compensation ments cash. 2000 on Livestock tivity; PM mal PDR or gar (January the o- pr taken the made postal at spe- given ments women no ria, funds, establish- be of Republic or to adopted year But been . certificates; bank pay crite levels; e owners. veterinary the this compensa-a develop implementa- financing, aspects, arrange- flow made for to ed ity forth ) cash, attention of new (2005) fund. have arrangements-- so ensur be yet Kyrgyz Culling payments by transfers, transmission village cial to to poultry The law earlier vides ment tion steps as equirr tion including fiduciary eligibil payment ments, and , e- ds o- continued( or pr and AI equirr ecorr estab- include compne- kept); Law compen- fiduciary (check, an of not GP for determined that be payments). implemen- compen- payment to payments amended for mechanisms, arrangements of specific does the forth). Georgia No ments sation (except need cash transfers pension 2004 eterinaryV vides lishment sation but detailed tation (financing, level sation, arrangements, so under Law to fund edvo for bank oject ovide the der omulga- certificates; by or pr pr assistance pr payments eterinaryV to an of MoA Appr compensa- made place; develop ough Armenia Culling all tion be transfers. 2005 in plans technical to implementation arrangement compensation administration thr tion omfr ojects of Pr et-V for right com- es com- and (but to on for mea- the certificates; es Services oduction and Law ocedur commerical Inspectorate determines intr Influenza farmers pr ocedur es). Albania Culling farmers--cash transfers munes/municipal- ity; farmers--bank transfers. 2004 erinary and confirms of compensations and the culling pensation--existing framework pr with additional sur vian A 3. and payment legal ements of Appendix Country Requir mode Relevant framework 68 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation to e- dis- mo- pr com- a ging vari- of place ch, media, ($4.08 and train- to chur including basic materials influenza eventive emer eak; schools) social take leaders, of pr and event or (mass to es outbr and society community elatedr the among sheet, edness, in communication civil used local Nigeria Communication par development tribution munication (fact vaccines), measur ing pandemic disease ous channels counseling, be bilization at levels community and million--nothing specific compensation. on be to (ii) eak. stages eout- to pr and omote epi- mil- may behavior pr com- campaign ecoveryr eoutbr (i) safe risks families, communi- epidemic to post ($1.3 pr planned campaign en, and eporting;r an (iii) communication ee omote communication eak omote educer and help intensive pr Moldova Thr of esponse:r br pr esponsibler to childr HHS, ties, media an munication during alert; demic to and lion)--information compensation included and cam- of and key to action and be devel- ovide public used into (US$1.87 and pr risks be farmers media be campaign will elatedr to the minority PDR to national influenza; to general Lao Communication strategy plan oped; paign information educate the about avian multiple tools elevantr material translated ethnic languages million)--nothing specific compensation. , to ovided com- ($0.36 counsel- pr society and Republic ("market- private media), training atf be extension, handwashing stakehold- civil, elatedr staf levels for ) of mass sheets, will all (govt., communica- Kyrgyz Communication activities ing via fact ing to ers sector farmers); in tions veterinary health munity million)--nothing specific compensation. continued( to to and to and AI omfr oactive com- ($0.9 eness, risks change infected; pr with GP communi- of mobiliza- impact elatedr activities awar the monitor poor to the ante stakeholders; farmers the eation Georgia Ex cation raise knowledge, understanding about all behavior interventions for becoming cr citizenry munity tion mitigate on million)--nothing specific compensation. - under to e- es and pr to edvo vulner on plans measur planned the epandemic oups pr (US$0.31 elatedr gr Appr edness pandemic oss Armenia Communication strategy educate able par mitigation acr and phases million)--nothing specific compensation. ojects ong for Pr e- to for str media ($0.46 awar year; with eparation oups materials elatedr communication planned pr gr first public Influenza IEC get Albania Risk plan the linkage for ness; of tar million)--nothing specific compensation. vian A 3. Appendix Country Communication strategy Appendix 3. 69 strat- 80% d all 3­5 key million) ee-fr con- HH is an oduction activities income than poultry (estimat- in hold poultry compo- diet. pr the e 143 backyar of of Nearly. d bulk within the livelihood Mor. be HHs esently found the pr of one national to e Nigeria Poultry is means generating and egy of inventory ed ar ranging poultry uralr backyar and sumed and important nent of ed of 18 of is been (as early oxi- com- cial fer sec- and by in small 80% 2005). farm- oduc- suf has eboundr with output eggs) million owned poultry season and million. pr indepen- op 10%. popula- oughlyr heads e and cial number variable, appr d 20 industry has dr but ong of Moldova ar edominance ge commer e and 2002, poultry in esents at peak livestock population country's lar str ds HHs The cial pr Since highly 5 a average owth Moldova The tor eprr the poultry tion, million September Fourteen bir by commer ers. backyar is with (summer fall) eachingr sever mately The mer characterized the of ers. dence, poultry a output, on since an (mean gr for for of for or kept all the farms. 80% of oduction on comprises smallholders ee-rangefr eggs; stock pr cial PDR chicken and sale; 20% smallholders; oduced Lao Sector mainly raising local meat consumption local poultry by about poultry pr commer . the of 5.2 (vast en); all poultry 2003 back- managed with of poultry Republic about of in smallhold- childr households number by their and 80% of some ) in ds women gyz Kyrgyz otalT poultry million majority kept ers yar by help about Kyr have o- continued( of and cial the pr of with eas- of mil- (major sector; AI income 90% con- incr about HHS small farms); total million GP 10.6 2005 of estimated in d commer owth only the output number than of 156 2004. in ces uralr e gr e but of in the Georgia otalT oduction poultry lion sour for mor pr ducted backyar high shar enterprises ing 10% duction; annual sector GEL under for edvo for cent poul- d per 30 oduction Appr accounts pr Armenia Backyar try about of Armenia. ojects d the Pr bir oxi- of 6 85% e US$7 in oss small- appr kg) small acr over (over by farming average matur number ed 2.5 of market 2006. Influenza the Albania otalT poultry million owned holders); poultry scatter country; price (weighing mately in early vian A e 3. uctur str Appendix Country Poultry 70 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation the Gaza om private and (fr the financing omfr fective Bank million other ef . est yet W US$4.8 Bank); expected sector Active Not I) docu- seri- which efersr the 9 ovincial the it of which ovinces; oposed ovinces pr (Phase in pr pr pr funds, 2004, 55 their the in instead fected eliefr adequate. ietnam for compensation eak compensated af use V specified to not e oject; the Not ment pr to eimbursementsr outbr only ously emainingr had disaster wer Active 1/09/20041 - eby eserver work o- pr eserver "insur will wher Bank); the of urkeyT million the govt. poultry into form om cial the ) US$5 the pay emia." (fr mechanism in pr a 1/2006 Initial fund further out commer ducers fund ance Active 09/1 continued( AI Bank; out- GP AI ($0.5 HP the exclusively for ajikistanT million under AHIF eaks). edvo US$0.8 $0.3 earmarked br Active 10/18/2006 for influ- Appr ces; FMD) , finance to esourr (avian (2005) fever ojects allocations fective Pr Romania own ef its swine million MoA. 2 yet Government omfr budgetary compensation enza, by Eur Active Not Influenza vian A 3. fund the date of Appendix Country alueV fective compensation Status Ef Appendix 3. 71 been to the Gaza been year been of has ecipi-r work has first ecipi-r Palestin- and Operational subsid- has the satisfactory the the the . annual the behalf oject by by Bank satisfactory for Pr the oject, (c) on and eement pr association, est The Association, oved (b) oved and agr W ogram the the Authority (a) Manual, the appr ent; pr of to appr ent; iary executed ecipientr ian I) and f DA, oject the oject oject (b) Pr detailed for staf PCU pr manage- oject training atf pr a Manual ement units pr units. (Phase IDA; of the plan appoint- DAH, additional establish- the staffing, (e) staf to of of (c) omfr to ocur (d) ee pr ovincial thr and management ovincial pr qualified financial pr ement ietnam of PCU; V NAEC Adoption forf and of adequate least and ocur the at ovinces; financial accounting (a) Implementation satisfactory finalization pr 2004­2005; ment seconded and engagement staf ment at ment implementation with in pr in for PCU implementation their di- fective- and ef would coor of urkeyT loan oject MARA appointed pr the ) the condition for have that The ness be MoH espectiver nators. continued( and as- to the the and AI Com- to to ad- been ecipi-r have the the an ement to to been Foot M&E oject com- been (PMU); GP has in Depart- of Pr the implemen- Institute, Zoology a communi- ocur the adminis- been has Operational ecipient.r the Steering of assistant pr composition ecipient;r by MoA, a have the Unit has the ajikistanT satisfactory oject dinators (c) an the and fund by satisfactory, the accountant, acceptable oject satisfactory the by with pr Disease to Pr ORT coor designated eterinaryV of specialist, all, by EMP under National Association (b) Institute Parasitology chief the the Association, edvo (a) mittee and the established ent; tation been MoH, ment Mouth and and ecipient;r cation specialist, the sistant specialist, pensation trator Association, employed Management (d) Manual, Association, opted (e) the adopted a of the will e- oject Bank ces. Appr in to ement for ensic un- Pr the man- and of PIM ocur financial the es for tables, arrange- (iii) of a others: pr ocur eports.r for in to esourr governing adoption including satisfactory The and Pr cost and interim ojects (2) Implementa- es M&E the Pr Romania committee measur PMU sufficient satisfactory (ii) EMP; formats and financial human oject Bank. among, accounting, ement and ocedur detailed Establishment Bank; Pr Manual the with the pr ocur Establishment satisfactory (1) Steering manner the the tion to specify (i) administrative, ment, management, adequate pr audits, ments; Plan, and sample Reports audited (3) ANSVSA ner and suitable Influenza vian A 3. fectiveness Appendix Country Ef conditions 72 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation , a the es the by in ad- and EMP Gaza under (a) to the to under Con- es fund (b) ocedur been es the Associa- other and fund; pr and committee and has ecipient;r the adopted to established orks, Bank satisfactory satisfactory the services, been ovided. expenditur by expenditur W MoA--no pr est compensation been has W For for ecipient.r (i) compensation the has manner Association; compensation manual, Association, opted (ii) Goods, sultants' satisfactory tion, the None None Compensation within details I) (b) for for e ence expert the Labo- the farm and for Com- maker ocuring Influenza by eferr plans (Phase endorsed poultry pr ence ed eeding GP audit to general equipment Agricultur guidelines br and Refer Development, Steering vianA implementa- specific decision new imported; chair of and ietnam GP international e is prior V Biosecurity an usirV . for ol, ovide no the Rural pr oject technical pr compensation. (a) each eviewedr by befor stock a NIVR laboratory the ratory $2.30 NA National mittee Contr Minister and will policies to tion-- about for -er e ar set en- ed im- es health an the with adoption under fund Opera- condi- of to and ojects the equirr poultry management of dance ocedur oject urkeyT animal is ower subpr pr Pr also the is payments selection accor the ) borr and It for satisfactory in the compensation the in Manual. disbursement the onmental ucturing A tion component by vir plan Bank. that the and plementation str made criteria forth tion None None TBD continued( the be - ed AI will 2. in- to omfr have includ- fund only been be well-de- GP com- satisfac- emer national declar ecoveryr to fund imple- a a a has IDA will govt. depart- of for avian yet the when to arrangements place, manual; been and the ajikistanT fund when on gency in satisfactory has by only imports govt. put gency emer veterinary (details under adoption compensation Disbursements the Association, ogram, edvo 1. compensation occur pensation mentation satisfactory been ing tory operational disbursement gency permitted emer fluenza by fined pr the adopted None None State ment determined). in , ef-r been Appr ower the exceed Safety between signing Eligibil- financed been satisfac-, and has et-V, decision to borr and be specific has EMP Food the ojects made loan not to Bank, the compensation. Pr Romania 2006, the million. by ANSVSA Sanitary 1,1 the and, about of 7.0 items for amount of oactively to ough Payments May date an EUR ity etrr ence established. tory adopted thr MPH. None None National erinary Authority--no er maker Influenza fund vian date A 3. conditions to millions) maker in compensation Appendix Country Disbursement Disbursements (total Ditto, only Decision Appendix 3. 73 e ar and to Gaza 59), farm- ge level; Bank benefi- ds), village (with lar and developed; bir compen- (p. uniform prices arrange- prices oduction the to be ed est the compensation for pr W in at to on in oducers 3,000 Bank epar national established--im- market certificates; pr yet pr suggests is at as medium than est specified name transfers. e W national based guideline A fund plementation ments a sation which prices compensation be costs distorted Gaza. Not Culling ers--checks ciary level; poultry mor bank e - of I) 5,000 4 and and the the per of matur for poul- eed br policy that frame- ect (US$0.13) poul- several eeding 10,000 ch) a elected br diagnos- state the practices: per (Phase dir amount cost of further of equitable ent VND other cases on support ough have VND . govt. planned ovide an feed cost us thr compensation for this pr curr eimbursementr e (Dec­Mar e vir farms; ietnam is wold for d some 2,000 up compensation (US$0.32) supply V in specified specified compensation d d, bir ovinces top another entir entir the sector oject A study would work national policy; smallholders, bir VND bir per try; pr to by (US$0.64); centers, the months the ing private pr ehabilitationr try stock Not Not be o- to for to and pr value . ent bank visits CEU fund compensat- poultry claims farmers curr ough by payments. poultry urkeyT be cial full thr periodic will culled made eviewr ) the be to at their community/village Compensation established; commer ducers ed of TBD Payment transfers; will the level compensation continued( - ea- up the AI the of the the and cost. the will bank the GP by author of days by laying eceding culling ds)--r disburse bir agent savings rayon to of pr 75% during the (owning adjusted, (owning and compensation established; rayon medium the or 200 an the ajikistanT compensation ds)--75% year calendar be as ough in closest families. and price eportedr which price eplacementr to bir in 7 PMU as place holders than notification Amanathbank thr under 200 during e evious inflation; ge the ithin edvo National policy fund smallholder to market hens competent ity month took average pr to lar mor sonable W upon PMU ajikT function for funds accounts branches ecipientr Appr at market paid days ojects Pr Romania determined week­60 specified Compensation locally price. One Not Influenza of vian level mode A eimburse-r 3. and arrangement for ements frame compensation Appendix Country Institutional and imeT ment Requir payment 74 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation of Gaza the public house- poultry eation million). ed and Influenza informa- popula- and cr epar Eradication campaign ough pr vianA other Bank and uralr thr field visits, (US$0.52 has ol ovided. particular est pr get in line W tar oducers MoA National Contr Plan--no tion Information to tion, pr meetings, to-house hot I) is has o- pr is basic other which animal clinical forth; radio,, ($0.90 stake- Plan Depart- Health local the This and so communi- (Phase and on national the strategy farmers, about ecognition,r egulations,r (TV mecha- level ed ol the ease of and at estockingr the Action by 2004. epar Animal incr holders about specific at ch information information: concerned and ietnam pr of contr to disease activities ovincial V framework Mar AI pr evention, ocess; National been mulgated ment in the the based. Public campaign level knowledge poultry stakeholders health signs, pr inform holders compensation nisms, pr cation e-media) and million). a to by to Plan the ed fective made ef is Action epar activi- popula- Health; elatedr pr indicates ovides oduction materials ag/health (call-in million)-- of pr an ograms; existing pr es urkeyT ence for the pr in plan eferr uctur ($2.78 specific ) National Influenza Ministry document the basis vulnerable include: media educational support f, Brief draft for the the that legal esponse.r Communication ties of to staf tion; investment infrastr centers) nothing compensation. continued( to of AI to en, exist an com- ovision omote social GP esponse:r (ii) (iii) mass laws establish pr and pr campaign arrange- childr ecoveryr and to during eparation communica- materials pr the will assistance eak safe behavior to alert; newsletters) ajikistanT compensation-- ough implementation HHs, and communica- omote Communication includes escribe for thr oject subcomponents risks eporting;r es, pr campaigns, million). under veterinary pr eoutbr pr omote ee campaign to help. fund technical pr pr epidemic information ochur edvo No that ments the a of identify arrangements. Thr communication (i) to esponsibler educer families, munities, media intensive tion an postepidemic tion and esponser media mobilization, of (br ($1.2 e to by to to e- in under and risk; me- Appr ds Animal and oups exist. at to oved with gr national awar dinance for activities behavior living ough mobiliza- or egarr Compensa- subject Agricultur the eady get authorities, appr of thr ojects in of alr and campaigns tar elatedr allocation epandemic phases; million)--noth- Pr Romania people 215/2004 health. framework es pr interventions population key local forth) 42/2004 no. payments raising Ministry so community ($1.49 specific ovisions ovisions ocedur Government no. law pr animal tion pr "Compensation Diseases" the budget; pr Communication during pandemic ness change among information educate (farmers, villages, and dia, tion ing compensation. Influenza vian A strategy 3. framework legal Appendix Country Relevant Communication Appendix 3. 75 in at oxi- ani- Gaza is poul- oler female million, total the ound (appr and ar poultry key and poultry a Palestinian the value-added deductions, at long-term in oduction Gaza of of 's Bank pr US$125 d in have oduction; input million; plays half est pr sector livelihood W ound Poultry ar one-thir mal try after, estimated is US$22 earingr HH incomes mately women involvement earing).r e the I) and poul- the ge 3­4 in market omfr eeder (lar 2,000 com- br small also private egis-r and sector sector; Agricultur the with . (Phase sector cial of of national farms other farms oduce state coming 23,000 farms batch pr mainly half the cial cial per annually the individual ietnam in oduction, half with that V poultry ols commer e pr ed The ietnamV oduction oilers prises the Department contr shar try other commer companies, farms); commer exist, pr ter br batches GDP d uc- sector un- 15% the poul- 50% oposal d egg d under eak, ranged bil- to urkey;T estrr pr modali- matching awar least and backyar in oject, poultry educer oduction ovided private at urkeyT outbr by pr to backyar intr pr and the urkeyT piloted with the amounts of be be (with ) to poultry in US$1.2­1.5 the of ucturing to annually; oduction oject competitive the pr raising; planned estrr will pr a ocess Prior of sector form lion poultry of under turing is practice try of ties the grants der submission pr cofinancing beneficiaries). continued( - by $15 AI was mil- poultry major 2004 2,000 eas; in mil- 0.8% GDP; tons GP of ar 19 or 77.7 imports ound million HHs, ound ar (5.8 smallhold- the cent by of uralr sector TJS oduction ar and at 63.3 ajikistanT value-added per pr at poultry 2004 in and poor ound agricultural meat of valued under owned consist in poultry ar (US$58,824) eggs; e e the meat edvo Seventy ar ity ers estimated the was lion of domestic estimated tons lion wer million of eggs). e ds o- and Appr is low the ds in uctur egarr oduc- who pr houses. back- uctural pr the domes- have 10% the oss oduction. ent str poultry poultry As appears ge of oduction. middle the accounting str poultry manage- meat pr that 20 oducers, the poultry acr pr in this concentrated. lar integrated chickens and pr and ojects oduction Romania's standar lies inher cial 60% of, 15 on slaughter cial also Pr Romania pr ead with, of e oiler feed, e 30% small holdings poultry fragmented practices. highly ar poultry e about domestic elyr ar d 70% particular traditional livestock br own smallholder commer e 43 oduction, be of commer Poultry widespr country yar for total The challenge biosecurity of operations their and and ment the pr to Ther ers hold total They establishments duce poultry their Ther and yielding espectivelyr tic output. Influenza vian A e 3. uctur str Appendix Country Poultry Appendix 4. Poultry Culling Record: Owner's Certificate Poultry Culling Record--Owner's Certificate Compensation Payment Received: Date: Amount: Signature: Community Location Date Name of Poultry Owner: Address: Birth Date: Identification Number: Compensation Total Com- Type of poultry Value per Bird pensation (chickens, ducks, geese, Number (local cur- Value (local No. turkeys, etc.) of poultry rency) currency) Remarks 1 2 3 4 5 6 7 8 9 10 -- Totals -- Culling Verified by the Community Culling Supervision Committee: Local Government Representative (Name) _______________________________ Signature__________________________ Veterinary Service Representative (Name) _______________________________ Signature _________________________ Community Representative (Name) _______________________________ Signature _________________________ Poultry Owner (Name) _______________________________ Signature _________________________ 77 References Adene, D. F., and A. E. Oguntade. 2006. "The Struc- M. Tiongco. 2003. 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Environ- nical Annex for an Avian and Human Influenza mentally and Socially Sustainable Development Prevention and Control Project. Water, Environ- Sector Unit, Europe and Central Asia Region. ment, Social and Rural Development Depart- World Bank. 2004l. Vietnam--Avian Influenza ment, Middle East and North Africa Region. Emergency Recovery Project. Rural Development Endnotes 1. Also see http://www.defra.gov.uk/Animalh/diseas- 9. Council directive 90/424/EEC http://www.warmwell. es/control/archive.htm. com/90424eec.html. 2. The World Bank recently estimated that the potential 10. http://www.inspection.gc.ca/english/anima/ overall economic losses from HPAI if it mutated to a hu- heasan/disemala/compense.shtml. man-to-human transmissible form could reach nearly one 11. Farm gate prices are calculated by subtracting esti- trillion U.S. dollars. Almost all of this is from "indirect" mated marketing margins from the farm to the market in losses (World Bank 2006 Global Development Finance). question (typically using an average per kilometer figure) Indirect losses in the UK from the 2001 FMD outbreak from observed local market prices that have been record- were estimated to be on the order of 9 times higher than ed as a price series for the market in question. direct losses (Thompson et al. 2005). 12. 1 US$= Rp 45. 3. Vertically coordinated (integrated) poultry systems share management decision making and asset owner- 13. See : http://www.aphis.usda.gov/vs/pdf_files/spr_ ship across distinct functions of the supply chain, as in may_june_02.pdf#search=%22Animal%20disease%20 feed millers owning or contracting breeding and broiler compensation%22. farms. 14. http://www.cdc.gov/ncidod/EID/vol12no07/06- 4. Consumer demand for organic free-range poultry in 0277.htm. Europe has led to the re-emergence of sector 3 type opera- 15. http://www.dgroups.org/groups/fao/hpai-compen- tions in that continent, but typically at much higher de- sation/docs/cas_Niger_English.pdf?ois=no. grees of biosecurity than in developing countries. 16. http://www.reliefweb.int/rw/RWB.NSF/db900SID/ 5. The growing organic/free range poultry subsector in LSGZ-6NAJ5A?OpenDocument. much of Europe has some characteristics similar to sec- tor 3 in developing countries, including the potential for 17. There should not be a poultry census before culling be- increased interactions of farmed poultry with wild birds. cause of the obvious sanitary risks and limited reliability However, in terms of overall good biosecurity and record of such an exercise. keeping, they seems to be best thought of more as sector 2. 18. See Appendix 4 for forms for culling and compensation. 6. This is based on anecdotal but widespread evidence ob- 19. 1 US$ = 0.54 UK pound. served in both countries during recent field visits. Check- ing the present status of sector 3 should be a priority for 20. Further work may be necessary on how to involve col- future work targeted at facilitating the evolution of poul- lectivities of farmers in this rapid response and to act as try systems to more sustainable practices. necessary if the official response is delayed. 7. Poultry are a short cycle species, broilers and meat 21. The issue of possible implications of the WTO Agree- ducks have a life of only a few weeks. Markets may be ment on Agriculture (WTO-AoA) for compensation prac- closed for several weeks while and outbreak is brought tices to be marked as agricultural support was discussed under control. at a meeting at OIE on October 18, 2006, to review a draft of the present manuscript. It was agreed that compensa- 8. To our knowledge, there are no good examples of this tion for culling for disease control would clearly fall under to draw upon, although there is anecdotal evidence sug- Annex II ("Domestic Support: The Basis for Exemption gesting that compensation does increase the number of from the Reduction Commitments"), Article 8 ("Pay- animals presented for culling. 85 86 Enhancing Control of Highly Pathogenic Avian Influenza in Developing Countries through Compensation ments made....for relief from natural disasters"), item c. although it could at a stretch be an issue for "restructur- This holds that: "Payments shall compensate for not more ing" programs seeking to tie compensation to moving to than the total cost of replacing such losses and shall not other agricultural activities. require or specify the type or quantity of future produc- 22. Leaving open the issue of whether it would be better tion." It was agreed that this item of the WTO-AoA would to have separate facilities for separate diseases. not conflict with any recommendations made in the re- port, which is confined to payments for disease control,