In Zambia, raising cattle is a risky business. A whole range of diseases attacks the country’s herds with depressing regularity, killing hundreds, if not thousands of cows with each outbreak. The cost of disease weighs most heavily on the rural poor — a large percentage of rural households depend on cattle to a certain extent, to ensure their livelihoods. Here, as in many parts of Africa, cattle are a traditional store of value, a kind of bank account on hooves.

Despite the danger, few smallholders vaccinate their cattle or test them regularly for infection. When cows fall sick, they usually die. Medical assistance is rarely available and, even when it is, farmers often don’t trust it to work.

The problem implicates both supply and demand. On the supply side, there are too few veterinarians in Zambia, and those available usually work exclusively with large, commercial cattle owners. Most vets have little interest in serving poor smallholders, who are spread across vast distances in Zambia’s thinly populated countryside. On the demand side, smallholders are often unaccustomed to the idea of preventive care and unconvinced of the value of modern medicine. These problems create a vicious cycle in which cattle remain highly susceptible to disease while rural households remain poor and vulnerable to the effects of harm on their stock.

Cultivating a Plan

Last year, the PROFIT Project saw an opportunity to help reverse this inauspicious cycle. PROFIT (Production, Finance and Technology) is a USAID-funded project, implemented by CLUSA¹ and Emerging Markets Group, ltd., that seeks to reduce rural poverty by linking smallholders into competitive, sustainable value chains. In the process of analyzing the value chain for beef, the PROFIT team identified the lack of veterinary services available to smallholders as a major constraint to development. They realized that, should smallholders be convinced (and given the opportunity) to protect their cattle from disease, their livelihoods would improve and the threat of falling into total poverty would lessen dramatically.

To achieve this vision, the PROFIT team had to first overcome two challenges. On one hand, they had to convince veterinarians of realistic, profitable business opportunities with smallholders, arranging a business model with which to do so. On the other hand, they needed to show smallholders that preventive care is worth paying for, and that vets can be trusted to deliver reliable services — a difficult task given the scams and business abuses that smallholders have fallen victim to in the past.

It was a classic chicken-and-egg problem: the vets wouldn’t invest until they were sure the smallholders would buy (and obtained the resources necessary to pay for) their services, and the smallholders would not buy until they were certain the vets were invested in suiting their needs.

The PROFIT team relied on two principles in responding to these dualistic challenges. First, they took a holistic approach to the issue, addressing both the supply- and demand-side constraints simultaneously. The team worked with vets and smallholders collaboratively, gradually finding common ground between the two. Next they began addressing the enabling environment — the external factors that affect the market in veterinary services for smallholders. These factors include restrictions on the importation of certain medicines, the presence of laboratories in which strains of diseases can be identified, and the ability of Zambian universities to produce competent, young veterinarians, among others.

Second, the team worked through market facilitation, rather than simply direct intervention. Such development of a sustainable market required that both the buyers and sellers take the lead in making changes in the absence of outside agents. The project members allowed themselves to assist, train, push, and prod their effort, all the while making sure that the veterinarians and smallholders “owned” the process of market development.

Methods for Continuity

Over the past eighteen months, PROFIT has been helping Zambian veterinarians launch a new business model enabling them to profitably meet the needs of smallholders. The model involves the recruiting and training of Community Livestock Workers (CLWs) who, in turn, take orders from the cattle owners in their villages and, through consultation with the vets, work with the farmers to apply preventive treatments to their livestock. This approach aids in building trust between veterinarians and smallholders (the CLWs are members of smallholder communities), while reducing transaction costs for the veterinarians. The livestock workers, paid on a commission-basis, are thereby given an incentive to educate smallholders about the importance of disease prevention.

The model also involves the use of Herd Health Plans (HHPs), in which smallholders agree in advance to purchase certain medicines and services and to apply regular preventive treatments to their animals. In exchange, the veterinarians agree to make the treatments available and to care for sick animals when necessary. HHPs provide vets with a consistent revenue stream, while holding the smallholders accountable for maintaining the health of their stock.

In addition to helping develop the new business model, the PROFIT team has been working with vets to improve their strategic planning, cash flow management, cross-selling techniques, and marketing directions. PROFIT is also launching a ‘Young Vets’ program, in conjunction with the national university and a number of private veterinarians, to help meet the rising demand for veterinary services. The program has helped the national laboratory upgrade its testing capabilities, subsequently allowing vets to identify diseases more quickly, further preventing epidemics.

Reliable Enterprise

So far, the vets that are working with PROFIT have earned nearly $40,000 (US) in extra revenue through serving smallholders². They work with 800 families, and have brought about 10,000 cows under the protection of HHPs³. According to a household survey undertaken by PROFIT in July of 2007, the number of farmers whose cattle contracted diseases fell by a third in just one year. Among those farmers, the number who sought medical treatment from their HHP-veterinarians rose from 15% to 55%. And, perhaps most importantly, the incidence of death from disease fell by about 60%⁴.

PROFIT’s experience demonstrates how the Base-of-the-Pyramid⁵ concept can strengthen a value chain development effort. Treating poor farmers as consumers, rather than simply producers, greatly enhances their relative market power. What’s more, the veterinarians have discovered a strong financial incentive to help meet smallholder needs. Through economic collaborating, both sides are making the business of raising cattle significantly less risky.

Student editor: Justin Wheeler is an undergraduate at Cornell University and a member of the Class of 2011. Aside from editing articles for the Johnson School of Management's Center for Sustainable Global Enterprise, Justin studies Communication and Applied Economics and Management. Justin hopes to pursue a career in the media or advertising worlds.

References:

1. The Cooperative League of the USA
2. Trend information produced by the USAID PROFIT Project, updated August 2007
3. USAID PROFIT Project Monthly Report, August 2007
4. Abdu-Rahaman and Joseph Zulu, “Household Level Assessment of PROFIT Activities”, USAID PROFIT Project, July 2007
5. C. K. Prahalad and S. L. Hart, "The Fortune at the Bottom of the Pyramid," Strategy + Business 26 (January 2002): 54-67