Demand aggregation: The key to reaching small-scale livestock producers
Majority of the animal production in south Asia and sub-Saharan Africa is scattered. They have traditionally been operated by millions of small-scale producers (SSPs). The number of animals kept by SSPs are few – ranging from one to hundreds. Many of these animals die due to preventable infectious diseases before attaining maturity and those entering productive and reproductive age produce less due to compromised animal health care. Availability of animal health products in SSPs areas is inadequate, greatly affecting the livelihood of SSPs.
Despite the small-scale livestock production supporting the livelihoods of 600 million smallholder farmers in the developing world, animal health product companies have not been able to fully tap into the SSPs market preferring to do business with the small commercial animal production market. Any mechanism to open up and fully take advantage of the SSPs animal health market can help animal health companies grow their business many folds, leading to higher levels of animal health product use and enhanced productivity. This will in turn lead to higher investment in animal health.
In regions where GALVmed is actively working with animal health companies to facilitate availability of animal health products to SSPs, one of the challenges realized from the beginning was the low demand of animal health products due to scattered nature of animal keeping by SSPs. This increased the cost of distribution for the companies and less interest in the SSPs market segment. However, there are innovative ways animal health companies can access the SSPs market reliably. One example is through engaging with dairy cooperatives which connect these companies to a large number of SSPs and offer them a demand for animal products in an appreciable volume. Women organized in self-help groups is another example through which demand is aggregated to attract the companies. Such examples of demand aggregation indicate a very potentially viable market platform that can benefit both animal health companies and SSPs.
Demand aggregation for animal health products can use different forms of input /output driven or other purpose platforms but it should be able to attract SSPs, veterinary service providers, and animal health companies. Working with a women self-help group in one of GALVmed’s project areas in India has been instrumental in the uptake of Peste des petits ruminants (PPR) vaccine. The project trained a woman vaccinator to work with the self-help group and the demand for the vaccine from the local veterinary retail shop has significantly increased. Companies that were not selling vaccines through such outlets previously have now recognized this opportunity for their business expansion.
Currently there is a red ocean type of competition among animal health companies to penetrate commercially operating markets like poultry and dairy. But there exist vast and never reached or very less reached blue ocean of SSPs market segment. Such SSPs market can also be lucrative if the demand is aggregated through an appropriate platform. Demand aggregation can lead to entry into a market not served before. SSPs can get the same level of animal health input as commercial animal farming.
Written by Peetambar Kushwaha, Senior Manager, Commercial Development, Asia