Who We Are Two values lie at the core of the foundation s work

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2 Who We Are Bill and Melinda Gates believe every life has equal value. In 2000, they created the Bill & Melinda Gates Foundation to help reduce inequities in the United States and around the world. Two values lie at the core of the foundation s work All lives no matter where they are being led have equal value To whom much has been given, much is expected 1

3 Grant making To Date Core Challenges Strategic risk taking Role of partnerships Select Results 1 million children's lives saved by GAVI immunization effort 12,911 scholarships supported to date 48,000 HIV+ patients in Botswana receiving treatment through ACHAP 4.2 million condoms distributed by Avahan in India 1,123 new, affordable housing units due to Sound Families Initiative Learning through successes and through failures 2

4 GLOBAL DEVELOPMENT GLOBAL HEALTH UNITED STATES OPERATIONS 3

5 The Context for AGRICULTURAL DEVELOPMENT The Context 4

6 Poverty Status (< 1$PPP/day) Latin America & Caribbean 46 mil. people in poverty Sub-Saharan Africa 273 mil. people in poverty South Asia 425 mil. people in poverty E. & S.E. Asia & Pacific 230 mil. people in poverty Prevalence of Poverty (in percent) Notes: Most recent Most recent Most recent Mapped national values are from most recent poverty data ( ) Poverty estimates are made with irregular frequency by analysis of household data. No estimates are available for some countries. For others, estimates can be more than a decade old. The adjacent country-specific key provides a guide to the period from which the most recent poverty estimate was available. Regional totals are calculated from 2002 reported incidence of poverty (UN MDG 2006) and population total values (FA0/SOFI 2005) 5

7 Percent Change in Poverty Rate Since % 0% +75% +29% -9% - 35% Oval = % change since 1993 Source: 2005 World Development Indicators 6

8 Less Than a Dollar/Day 75% Rural (890 million people) 25% Urban 64% Employed by Agriculture 36% Other Source: IFAD, 2001; World Bank,

9 Crop yields and agricultural output are not keeping up with population growth Maize yield (Hg/Ha) World South Asia Sub-Saharan North America CAGR = 2.15% CAGR = 2.13% CAGR = 1.60% CAGR = 0.7%

10 The problem: Rural poverty is widespread and difficult to address Low investment in research Agricultural research expenditures, 2000 $ Billions, percent 100% = $36 billion per year 62 Developed countries Low input usage and yield levels Fertilizer use kg/ha arable land, SSA World SSA ME and LATAM Developing countries Asia-Pacific Of the ~$36 billion spent on agricultural research in 2000, only ~$1.5 billion (~4%) was spent on SSA $13.8 billion N. Africa Developing co untries Average cereal yields by region, mt/ha ROW SSA The problem: There are 636 million people with low incomes and insufficient food 229m in SA 407m in SSA Many live in areas where agriculture is the primary means of income Although these regions have abundant potential (e.g., sunlight, labor, water, knowledge) productivity is low, which represents both a huge need and opportunity Very limited access to markets Road access Metres road/capita Poor policy and regulatory environments 21.4 Nigeria* India USA * Nigeria has some of the best infrastructure in SSA so other nations are even worse off Overview of weaknesses in the policy environment in SSA Limited coverage Emphasis on planning and not impact assessment Priority-setting for agricultural development based on objectives and theory of change Monitor and evaluate Low investment, capacity and poor governance Implementation Data & statistics Advocacy Policy analysis Decreased commitment, lack of policy and understanding Lack of decentralization in policy planning Source: FAOStat; IFDC; World Bank Source: FAOStat; IFDC; World Bank 9

11 Theory of change: Our beliefs and approach to reduce rural poverty We believe 1. On-farm income* is the primary change determinant for our target populations, and will drive reduced hunger and improved nutrition 2. There are four main levers that impact onfarm income Enabling environment** Science and technology Productivity Market access 3. Intervention sequencing matters e.g., Market access and farmer productivity need to be addressed in simultaneously to Create incentives for farmers to make appropriate investments Enable farmers to shift to higher value products over time Enablers such as infrastructure and policy progress can be preconditions for success 4. Sustainable transformation at scale depends upon changing farmers, governments and the private sector s incentives and abilities to behave differently This approach enables impact through 5. multiple poverty reduction pathways, including: Increased off-farm income Reduced food prices Improved on-farm consumption Theory of change model: dynamics of system transformation Reduced food prices Leverage science and technology Improve farmer productivity Increased on-farm income Enable market access for surplus production Build the enabling environment** (e.g., policy, infrastructure, extension) Improved on-farm consumption Increased offfarm income * As measured by total consumption ** Enabling environment describes the policy and regulatory environment and enabling investments such as infrastructure, extension, education 10 Source: Team analysis

12 Learning from past failures shape our grant-making philosophy PRINCIPLE 1 We view the smallholder farmer as our customer. OPERATING DEFINITION Solutions must be chosen by farmers. Grants must provide evidence of needs in a specific farmer segment Women must benefit. Grants must not increase the risk exposure of farmers 2 We address multiple system constraints and drivers to achieve greatest impact. Investments must link to current and future investments. There must be evidence of demand before increasing productivity. All programs respond to how they intersect will all key productivity initiative areas. Concept notes are circulated for input before proposals; there is a cross portfolio review. Program design principles Execution principles We align solutions with incentives to create sustainable change. We strengthen institutions and partners to achieve scale and sustainability. We value that natural resources are the basis of sustainable productivity. Our success requires measurement, learning, and adaptation. We hold partners accountable for performance. Design accounts for and specifies the incentives of all partners and the beneficiaries. Solutions align with economic, social, and political incentives or change them. Programs have plans and partners for future sustainability. We innovate to solve problems that have resisted sustainable solutions. Budgets are analyzed by where and who receives spending. We have clear strategies for long-term international, regional, and national roles in every program. Programs measure and address environmental impacts and trade-offs. Programs seek to enhance the natural resources upon which agriculture depends. Create milestones for evaluation and adaptive management. Brief the team on learning from every grant. Provide intellectual leadership in your field. Include funds, milestones, and plans for knowledge dissemination. Grant agreements are based in contingent payments for performance. M&E systems must be 3 rd party verified and, preferably, independent. 11

13 Livestock is a significant source of income for farmers in developing countries, often generating as much income as crop production THE CONTRIBUTION OF LIVESTOCK TO AGRICULTURE GDP Livestock share of Agriculture GDP (%) No Data <= > 60 Source: ILRI

14 Livestock plays a diverse role in the livelihoods of the majority of our target population Basic profile Rural farmer with income of less than $2 a day Concentrated in South Asia and Sub- Saharan Africa Obtains income from small daily sales of livestock products and/or less frequent larger sales of animals Consumes various portions of livestock output (e.g % of milk) within the household, often depending on market orientation Family labor used in livestock production and marketing; women often perform the majority of work Poor livestock keepers general engage in one of three types of production systems Grassland-based pastoralism in which livestock is largely held as an asset Mixed croplivestock which for of income production in livestock accounts high percentage Mixed crop-livestock production in which livestock is a supplemental activity 13

15 We prioritize our livestock interventions based on size of impact Objective: Determine where the most smallholders would benefit from livestock development and the most economically important species for smallholders; deep dive to identify the biggest source of value creation along specific value chains Four filters were applied: Efforts to generate more and better livestock data are needed for future decisionmaking Number of poor livestock keepers by country Livestock product contribution to household income Productivity gap vs. Benchmarks Impact by type of intervention along value chain Region and country focus Species focus Types of intervention, e.g. genetics, nutrition, health, other husbandry, markets 14

16 There are 1.3B poor livestock keepers globally, with South Asia and Sub-Sahara Africa accounting for almost 60% Number of poor livestock keepers (<$2/day) by region and country 478 million Other Bangladesh (46M) Pakistan (50M) India (367M) 286 million Other 36 countries Kenya (11M) Tanzania (11M) Sudan (13M) DRC (20M) Ethiopia (31M) Nigeria (64M) 281 million North Korea (6M) China(274M) Other Vietnam (20M) Philippines (25M) Indonesia (52M) Colom. (6M) Arg. (7M) TOTAL: 1.3 Billion 77 million <$2/day livestock keepers 132 million 47 million Other 17 countries Turkey (7M) Iran (9M) Egypt (10M) Source: ILRI 2008 South Asia SSA East Asia SE Asia WASA Central/ South America NIS 15

17 Cattle and poultry products are the largest contributors to household income with the most significant opportunities for improvement % Output increase opportunity by closing productivity gap PRELIMINARY 60 Sheep Milk (2% income, 126% gap) Cow Milk (49% of livestock income, 42% productivity gap) 40 Goat Meat (4% income, 27% gap) Chicken Eggs (11% income, 37% gap) Beef (11% income, 31% gap) 20 Sheep Meat (3% income, 12% gap) 0 Goat Milk (6% of income, 5% gap) Chicken Meat (14% income, 9% gap) % of Total Livestock Producer Income in top 20 countries Prioritized Species/ Livestock Products Cow Milk Beef Chicken Eggs Chicken Meat Note: Productivity gap calculated by comparing output per animal against Average of top quartile among Least Developed Countries. For India, productivity gap is calculated by comparing regions to average top quartile producers in India (data pending) Source: Consultant analysis 16

18 Focusing on milk, beef, chicken meat and eggs will address the vast majority of the opportunity Livestock Income Increase Potential by Region and Product $3.5B Goat Meat $0.3B Eggs $0.5B Chicken Meat $0.3B Beef $0.3B $1.7B $7.1B $0.1B Sheep Meat Goat Milk Eggs $0.8B Sheep Milk $0.8B Eggs $0.1B Beef $0.7B PRELIMINARY TOTAL: $12.4 Billion Annual Impact Milk $2.0B Chicken Meat Beef $0.3B Milk $0.3B Milk $5.3B Source: Consultant analysis South Asia West Africa East Africa Central Africa Livestock Income Increase Potential = (Productivity Gap x Current Production Output x Current Producer Prices ) / (Current Production Output x Current Producer Prices) Livestock Product Livestock Product Productivity Gap = % increase in output for underperforming countries to meet average productivity of the top quartile of Least Developed Countries for that Livestock Product Assumed 20% productivity gap for Milk and Eggs in India (Data pending) 17

19 There are numerous potential solutions along livestock value chains ranging from science and technology to market linkages interventions Inputs (S&T) and productivity (delivery) Genetics Nutrition Health Other husbandry Storage, aggregation, transportatio n and agroenterprise Processing Raw product Minimal value addition Major value addition Markets Local Regional Global Consumers Emerging solutions: Tropical breeding programs Hybrids, MAS, other biotech breeding programs Genetics delivery systems Tailored feed Improved fodder Feed industry capability Fodder value chain solutions Vaccines, other pharma and diagnostics Access to animal health services Information and delivery systems Quality output Water Housing Extension and education ICT Create hubs for aggregation Improve transportation and communication networks Access to capital and insurance ICT Increase processing capacity and utilization Infrastructural support (e.g. electricity, maintenance) Stimulate consumer demand Import substitution Policy and regulatory influence (trade, quality) 18

20 We will quantify value creation in productivity drivers to prioritize areas of focus along specific livestock value chains Impact of intervention: Productivity Gap x Current Output per Animal x Producer Prices x Average Herd Size = Income Increase Potential on Livestock keepers Income Increase Potential for Livestock Keepers Dollars per year ILLUSTRATIVE Prioritized productivity areas for intervention 19

21 Our initial grant-making has focused on increasing the incomes of smallholder dairy farmers 2007: Strengthening the dairy value chain in Bangladesh, CARE Bangladesh The project aims to test the scale-up feasibility of connecting small-holder dairy farmers to the formal market sector Approach $5.3M over 4 years in Bangladesh Leverage CARE s experience to enable smallholder farmer access to processing sector and value added services Improve milk collection in rural and remote areas through chilling and collection points and house-to-house collection Improve access to inputs, markets and services by mobilizing groups of poor farmers, producers and char dwellers Improve milk transport network Ensure access to quality paravet services at the producer level Impact 35,000 smallholder and landless households double their dairy related income 17 chilling facilities increase their profitability 350 house-to-house collectors, 50% female, trained and in operation 15,000 farmers increased milk production by 50% by end of Year 2 10% increased consumption of milk by pregnant and lactating women and children under five 2008: East Africa Dairy Development Project, Heifer International The project aims to demonstrate that market forces can sustain delivery of technology and services to poor farmers Approach $42.9M over 4 years in Kenya, Rwanda, and Uganda Strategic partners are TechnoServe and ILRI Establish community dairy hubs around chilling plants to provide health, nutrition and breeding inputs, financial services, and farmer training Mobilize farmers groups for training, milk collection and service delivery Train entrepreneurs to run successful businesses as service providers: 415 community animal health providers, 415 artificial insemination technicians, 151 fodder farmer trainers Train 70,000 women Impact 179,000 smallholder farmers double their dairy related income 37 profitable chilling plant businesses established Milk productivity increases: 338,400 artificial inseminations completed; 110,000 farmers access services of community animal health providers; 169,000 farmers utilizing high quality feed 162 women in leadership positions Improved asset holdings and nutrition for 179,000 families, or 1 million people 20

22 Dairy Value Chain: Biggest Issues PRELIMINARY Inputs (S&T) and productivity (delivery) Genetics Nutrition Health Other husbandry Storage, aggregation, transportation and agroenterprise Processing Raw product Minimal value addition Major value addition Markets Local Regional Global Consumers Key issues: Low yield from indigenous breeds Exotic breeds too costly to maintain Lengthy scaleup of new breed introduction Reliance on public rangeland for grazing Overstocking of rangelands Imported feed are cost prohibitive 25% of production lost due to diseases Limited access to vet services Public funding under budget squeeze Lack of communication channels Lack of investment in vaccines relevant for poor cattle keepers Inadequate communication infrastructure Lack of integrated natural resource management Poorly constructed/ maintained roads Lack of access to credit and insurance vehicles Property rights enforcement (preventing livestock theft) a major concern Economies of scale in processing, but stricter quantity and quality requirements difficult for smallholder farmers to meet Underutilization of existing dairy processing facilities in parts of Africa Unreliable infrastructure (e.g. electricity) limiting capacity and quality of existing operations Marketplace lacks basic infrastructure for effective and quality trade Repeated taxation and roadblocks discourages trade High tariffs on international trade New sanitary and phytosanitary standards (SPS) difficult and costly to meet for poor livestock keepers Source: FAO Livestock Report 2006, ILRI 2008, The Role of Livestock in Economic Development and Poverty Reduction (PPLPI 2004), Review of the Livestock Sector in the Horn of Africa (FAO 2004), Gates Foundation past grant research 21

23 Dairy cattle genetics is emerging as a key lever along the value PRELIMINARY chain Impact of intervention: Productivity Gap x Current Output per Animal x Producer Prices x Average Herd Size = Income Increase Potential for Dairy farmers % ~500 kg ~$0.28/kg ~2 Income Increase Potential for Dairy Farmers Dollars per year Genetics is emerging as a potential lever to drive large impact, but further quantitative analysis of value drivers is needed We will explore options for and our potential role in improving dairy cattle genetics, potentially through leveraging emerging molecular techniques Source: Consultant analysis 22

24 We will invest in the development and delivery of animal health products addressing diseases with greatest impact on smallholder livestock producers Our approach Invest in data collection and analysis for decision-making: What diseases are most economically important to our target population? Fund diagnostics and early warning systems Focus on key health issues along selected value chains (i.e., dairy) Support affordable solutions with appropriate/feasible delivery approaches Ensure global access principles Strengthen capacity of local & regional institutions to lead the process of disease prevention and medication Currently not focused on human health issues resulting from zoonosis GALVmed s priority diseases**: Ruminants: Contagious Bovine Pleuropneumonia * Contagious Caprine Pleuropneumonia * Rift Valley Fever * East Coast Fever * Haemorrhagic Septicaemia * Peste des Petits Ruminants * Sheep and Goat Pox * Trypanosomiasis Avian: Newcastle Disease * Avian Influenza Swine: African Swine * Porcine Cysticercosis * Classical Swine Fever Potential partner: GALVmed New organization focused on animal health needs of rural poor Invest across the vaccine value chain to bring products to market Develop public-private partnerships and partner with local institutions Include farmer input in vaccine design **Perry et al, 2002; GALVmed Technical Advisory Committee Recommendations,

25 Key Questions for Animal Science Community How can we best engage with the animal science research community in the US to meet our poverty reduction objectives in Africa and South Asia? What are the key institutions we should engage and how do we best build capacity in Africa (realizing that we can only work directly with larger, international organizations)? How can we stimulate research and investment into innovation for animal genetics, health and nutrition in Africa and South Asia? Do you have recommendations for how we can assess the value drivers in animal production within different systems so that we can better prioritize interventions for the most impact? How should we think about setting up a platform for better livestock data generation especially in animal health? How do we best build a movement to take advantage of the poverty reduction opportunity that livestock represents for poor smallholders? What are we missing? 24

26 THANK YOU! 25