Poultry Sector Support and Protection, Structural Change and Disease Risk

Ray Trewin

International and Development Economics Working Papers from International and Development Economics

Abstract: Poultry sectors’ domestic support and trade protection, or assistance, influences the way they develop, in particular their structure, trade, investments, and aspects of disease risk. Nominal Rates of Assistance (NRAs) measuring adjusted gaps between international and domestic prices were used in analysis of relationships between these factors. Structural data took the form of average chickens per holding as well as the predominant FAO Sector (I Industrial - IV Traditional). General “bird flu” incidence was obtained from an official website. Assistance constrains efficient trade, encourages smuggling/informal trade, diminishing the incentives for good management, leading to greater disease risk. It also constrains efficient investment, leading to greater disease risk through weaker SPS, research and other relevant institutions. Assistance can also constrain structural change, hindering development of efficient industrial production systems, or maintaining larger traditional sectors, resulting in greater disease risks. The research illustrates that “true” (unassisted) exporters tended to have low NRAs and “true” importers high NRAs. Negligible trading countries mainly had low NRAs apart from those with strong self-sufficiency policies. Structurally, all countries experienced concentration with relative growth in industrial sector holdings. The NRA and structure scatter plot illustrated that the “true” exporters and “true” importers fell into two groups of mixed structures; low (high) NRAs, more (lower) market incentives and lower (higher) HPAI incidences. HPAI experiences also appeared to be regionally based. A clear conclusion is that assistance does not determine structure – some countries had strong enough political economy objectives to be willing to pay the high cost of over-riding open market forces on their structures. However, assistance did determine whether structures were distorted and not economically efficient. Technically efficient developed structures in conjunction with (export) market incentives driving economic efficiency and encouraging better risk management, appear to positively impact on HPAI risk. High assistance levels hinder open markets’ role in the demise of inefficient, poorly managed productions systems, whether they be traditional or not, and creates greater disease risk.

Pages: 35 pages
Date: 2009
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