Report of London International Development Centre Workshop on Facilitating Appropriate

Report of London International Development Centre Workshop on medicines, seeds, and fertilisers: sharing agriculture and health experiences in delivering products to the rural poor, held on Monday 6 July 2009 at LIDC

Purpose: The workshop aimed to bring together agricultural and public health specialists to explore challenges in delivering products such as medicines, new seed varieties, fertilizers and pest control agents to rural communities in developing countries. The groups shared experiences in product distribution, marketing, subsidy, uptake and other areas to better inform and empower health and agriculture programmes, and to find synergies for research cooperation with the ultimate aim of improving delivery of products and services to the poor.

Presentations: LIDC members are able to view Powerpoint presentations at the LIDC pages of the Bloomsbury Learning Environment via http://www.ble.ac.uk/ under the ‘Agri-Health’ tab.

SESSION 1. Understanding market systems and their efficiency (with introductory background) a. Human health – Markets and efficiency in the health sector. Dr Kara Hanson Dept Public Health & Policy, London School of Hygiene & Tropical Medicine (LSHTM) outlined the importance of the private sector in health in developing countries, described how market failures and value judgements underlie the economics of the health sector, and illustrated economic models of competition in health markets.

 Private providers are an important source of health care for the poorest quintiles; they provide a diversity of products (e.g. retail medicines) and services (e.g. simple clinical services, diagnostics, family planning) and exhibit a range of relationships with the public sector involving regulation, complementarity / substitution/ competition, and purchasing or contracting. The role of the public sector in health can be explained through market failures – both under-provision of services which have positive externalities (e.g. immunization) and over-provision of services with negative externalities (overuse of antibiotics, artemisinin monotherapy). This provides a rationale for public financing of essential health services; and raises questions about effective regulation. The poor quality of many informal providers (often untrained), and supplier-induced demand can lead to catastrophic expenditures. The challenge is attaining the most appropriate mix of providers so that the private sector helps to meet public health goals.

 Dr Hanson showed an example of competition in healthcare markets leading to lower prices (antimalarials in rural Tanzania ), but said competition can sometimes lead to higher prices (especially for services) because individuals have idiosyncratic quality assessments. Competition may also lead to lower quality of services for patients in hospital markets, where consumers sometimes assess service quality through misleading structural indicators such as equipment and infrastructure

In summary, although some descriptive evidence of the size and nature of the private health sector exists, it is patchy. The heterogeneity of services/products suggests that their individual markets will not operate uniformly. Our understanding of how health care markets operate and how to ensure they meet public health needs is still low.

1 b. Agriculture – Understanding Market Systems and their Efficiency. Colin Poulton, Centre for Development, Environment, and Policy, School of Oriental & African Studies (SOAS), University of London explained the theoretical logic of liberalisation, market integration, and the production response.

 Liberalisation of markets aims to attain better prices for producers of products and lower prices for consumers by removing policy distortions and reducing marketing margins. Evidence for maize in southern and eastern Africa shows falling wholesale- retail margins over time (except South Africa), falling spreads between deficit and surplus areas, and producer prices static or falling. In Kenya fertilizer retail outlets increased and distance travelled to outlets halved from mid-1990s. But an enduring puzzle in Sub-Saharan Africa is why marketing margins remain high despite reforms and the relative lack of sophistication of liberalized markets. Colin showed examples of wide differences in margins between agricultural traders in different countries e.g. Benin and Malawi, possibly explainable by their trading histories and efficiencies.

• Results of studies of market integration indicate that commodity markets in Africa are generally well integrated, although the extent of integration varies between countries and commodities. Transmission of changes in international prices to domestic markets is impeded by trade policies, high transaction costs, and non-competitive behaviour.

• Declining land holding sizes mean that only a minority of farm households produce food surpluses and are likely to respond to higher prices. Smallholder producers need better access to a range of pre-harvest services such as access to seeds, fertilisers etc, seasonal credit, and technical advice. c. Veterinary – David Leonard, Institute of Development Studies at the University of Sussex made a plea to connect human and animal healthcare. Provision of veterinary medicine has clear economic value for animals whereas human healthcare is complicated by ethical and emotional issues. His experience in both areas indicates consumers are generally rational in their choices, and are able to calculate margins appropriately. He said markets shouldn’t be regarded as homogeneous because people behave differently according to the type of product or service, with quality often the driver. Externalities affect the behaviour and predictability of markets, so it’s important to distinguish preventive from curative service, and to realise that the private sector can only cope with low externalities.

 High subsidies on medicines can lead to increased smuggling and hoarding and reduced access by the poor. Subsidising access and services rather than subsidising the products themselves is more equitable. F  In veterinary and human healthcare markets, consumers suffer from inability to locate quality providers. The quality of healthcare in faith-based mission facilities in Africa is often higher than government services.  In general vet practitioners go to the animals whereas in human healthcare practitioners expect patients to come to them. Because of the way the two sectors evolved during the colonial era, government vet practitioners usually sell products to users whereas nurses and doctors don’t.  Diagnostic skills are undervalued in veterinary medicine. Monitoring, prevention and control of animal diseases all affect health and marketability of animals and are difficult to do in private settings.

2 Discussant: Prof Anne Mills, Dept Public Health & Policy, LSHTM summarised points:

 The perspective of economic and public management of markets is relevant to all three sectors (human, vet, agriculture). Each sector has four main players: consumers, producers/sellers, distributors, and policymakers/regulators.  The methods of study used by individual sectors could be beneficial across all three sectors, such as understanding margins and what affects them.  There’s a general need for more provision of support services and diagnostics for small-scale producers or sellers in both health and agricultural sectors.

SESSION 2. The use of subsidies d. Agricultural input subsidies – Andrew Dorward, Centre for Development, Environment, and Policy at SOAS, said that although parallels between sectors exist there are also big differences, and we need to ask ‘Who are subsidies for and who actually benefits?’

 Subsidies appear to be for the producer in agriculture and for the consumer in health. They are intended to address market failures, and are meant to be short- term, to introduce a product or service the supply of which can then support itself. But they are difficult to exit and can slow development of independent input supply systems.

 Universal subsidies were common in the 1960s to 90s, and sustained input subsidies were a critical contribution to the Green Revolution in Asia but have had mixed success or failure in Africa. Fertiliser subsidies are particularly expensive, placing heavy demands on government budgets.

 There is renewed interest in subsidy in Africa, partly due to concerns about declining soil fertility, agricultural stagnation and rural poverty. But different stakeholders have different objectives. The paradox of subsidies is that they need strong political backing to establish, but this leads to fraud or leakage and an inability to exit.

 Agriculture has developed some “wisdom” about subsidies over the years:

o Don’t subsidize price – ration, limit volume and control level of supply o Encourage evolution – making subsidy short term o Targeting – focus on gaining new users, limit exploitation by old users e. Health case study –. Piloting the Global Subsidy: the impact of subsidized distribution of ACT through private drug shops in rural Tanzania. Catherine Goodman, Dept Public Health & Policy, LSHTM and KEMRI-Wellcome Trust Research Programme, Nairobi, said that despite free or highly subsidised public sector provision in Africa, access to antimalarial drugs remains poor - only 3% of febrile children in Africa obtain artemisinin-based combination therapies (ACTs), the most effective treatment for malaria. About half seek treatment from private sector retailers. But as ACT retail prices are 20-40 times those of common alternative antimalarials, most retail customers buy the cheaper less effective drugs.

Dr Goodman described a controversial proposed global subsidy on antimalarial medication called The Affordable Medicines Facility–malaria (AMFm). This financing

3 mechanism is designed to expand access to ACTs and will be managed by the Global Fund. The Fund will reduce the manufacturer sales price of ACTs supplied to public, private and not-for-profit sector buyers. Patients will pay approximately US$0.2 - 0.5 for each course of ACTs, a very significant reduction from current prices. The first phase will be launched in 10 African countries and Cambodia. But concerns about the proposed global subsidy include: Will subsidies be captured by middle-men? Will the poor benefit? Will drug use be low? Will attention be diverted from public facilities?

 In a pilot study in 2 rural districts of Tanzania during 2007- 08, ACT (artemether- lumefantrine) in specially designed packs was sold to national wholesalers at average $0.11 per dose. The wholesalers delivered drugs through their own distribution networks to private drug shops, the most common retail source of antimalarials. One district had a Suggested Retail Price (SRP), but the other didn’t. A third district with no intervention was the control.

 Results showed a pronounced increase in percentage of drug stores stocking ACT in intervention districts, no change in the control district. Shops with two or more other shops in their competition radius were significantly more likely to stock ACTs. Forty-four percent of exit interviewees said they had bought subsidised ACT. Only 4% of exit interviewees belonged to the poorest quintile of the population, but 26% belonged to the combined lowest three quintiles.

Dr Goodman said the implications from the AFMm pilot are: • Subsidies can lead to rapid and dramatic increases in ACT use • Subsidies were passed onto consumers, and prices were not significantly higher at more remote stores • Generalise with caution to nationwide scale or other countries • SRP should be used with caution, to avoid artificial price inflation • Additional incentives might encourage distribution to remote outlets • Additional interventions may be needed to increase ACT access among poorer individuals who are less likely to seek care from drug stores

Discussant: Dr Jonathan Rushton, Royal Vet College made the following points: • Subsidies have worked well in UK to develop the animal production industry, but the environment in which subsidies are given must always be considered to get the balance right and avoid escalating costs.

• There’s a need to subsidize service provision – also education – rather than using input subsidies.

• Marketing campaigns may have a stronger effect on uptake than price subsidies

SESSION 3. Other interventions f. Agriculture – PPP Mechanisms as Principal-Agent Models. Colin Poulton, SOAS, presented a large table showing risks, benefits and incentives of alternative options for delivering agricultural products and services such as extension contracts, challenge funds, and guarantee funds, through public-private partnerships (PPPs). Incentives to the private sector to provide services and products can offset their risks and costs, e.g. MPESA (mobile banking in Kenya), loan guarantees. The state’s role is to ensure coordination and negotiate to attract investment and fill gaps.

4 Poulton said that:  The evidence base for effectiveness of interventions is small (especially for agriculture)  Design of interventions is key- knowing how to avoid putting in matching funding to a grant that would have happened anyway. Unpredictable government policy environments constrain private investment. g. Health – Health franchising Cynthia Eldridge, Maire Stopes International, Nairobi described how the Marie Stopes franchise for family-planning services operates in East Africa. In peri-urban and rural settings they offer cheap high-quality services under a ‘Blue Star’ brand at government clinics and at facilities of licensed private providers. Branding of providers’ facilities and training of mid-level health providers to ensure service quality are seen as key. Training accounts for 30 % of their franchising costs and is much valued by the recipients. A contract with the franchisee specifies their responsibilities. Although franchising is a non profit activity for Marie Stopes, each franchisee makes a profit

Franchising is of growing interest – a major issue is to take service delivery to national scale. Social franchising works with existing providers, leveraging their training, clientele, and infrastructure. h. Veterinary - Meeting the Needs of Poor, Marginalized Livestock Keeping Families – Concerted Action on Livestock and Livelihoods (CALL) project in Bolivia. Jonathan Rushton Royal Vet College said animals play an important role in the livelihoods of poor families throughout the world, but our knowledge about strategies that families employ to use animals to improve their livelihoods is limited. This creates difficulties in planning appropriate livestock interventions.

In the Latin American region agricultural policies are focused on research, technology transfer and technical assistance for strong value chains. This focus is a response to the changes in the value chains from subsistence systems to complex and emerging value chains. In general the value chains are developing strongly in relation to international commercial demands, and where the private sector is well organised and financed. Their development needs very little support beyond regulation and monitoring from the state. However policies that are only focused on value chains are weak in reaching and satisfying the demands/needs of socio-economic groups that are unconnected to the value chains. In an ideal system a dynamic private sector facilitated by the state would offer services to disadvantaged groups through NGOs and CSOs, advancing smallholders’ interests.

Javier Guitan, Royal Vet College described a practical application - The CALL project in poor and isolated communities in Bolivia. The project was a socio-economic and institutional analysis of their use of animals. A field technician was present 7 to 10 days per month in order to demonstrate the seriousness of the community support.

• Results showed animals were important for home consumption (poultry in the Valleys and sheep in the Altiplano), as a source of money for small expenditure (pigs in the Valleys, llamas in the Altiplano) and for larger expenditure (mainly pigs in the Valleys but also cattle, llamas in the Altiplano). In both field sites

5 livestock income and investments were similar per family. However in the Altiplano the families were much more dependent on livestock. In both communities animal health workers were trained and veterinary first aid kits established with revolving funds.

• In the two study zones public and private organizations were not offering services or inputs to meet the demands and needs of the poor and isolated communities. Various farmer organisation strengthening activities were carried out. The only permanent government institutions were schools, so the project worked through them for medium and long-term information transfer. Various informational and educational extension materials were developed including leaflets, puppet shows and workshops, targeting the schools.

Javier also described a project in which Community Animal Health Workers perform surveillance activities using a combination of quantitative and qualitative approaches, led by a veterinary epidemiologist and a social geographer. Challenges were sustainability and integration with national strategy. But formalization of roles and responsibilities of CAHWs was partially achieved, with certification recently granted.

Discussant – Bruce Mackay, HLSP healthcare consultancy said that donors generally don’t understand markets well, so many programmes aren’t well designed. Timescales are constraining and long-term sustainability is a problem for programmes run by NGOs, who need to continuously raise donor finance. There is a lack of investment in regulation too, so removing franchisees is difficult.

The concept of a normal level of disease and acceptable level of ill-health in animals is not directly applicable in human health, which involves ethical and cultural issues too. is a professional services firm specialising in the health sector both services firm specialising in the health sector both GENERAL DISCUSSION

Discussion aimed to extract common experiences between human and animal health and agricultural sectors, identify differences, and stimulate new ideas for approaches and tools/methodologies to improve delivery. The discussion also aimed to identify potential research questions and collaborative activities that could be carried out using the variety of expertise of the participants. a. Common issues across human/animal health and agricultural sectors

 What are best ways of subsidising access, as opposed to subsidising products?  How to manage risks in subsidising the supply chain (e.g. drugs)?  How to best regulate providers, in both public and private sectors?  What impact do Intellectual Property considerations have on supply, and what’s the effect of subsidies via donations and differential pricing.  Difficulties of predicting who benefits from applying subsidies- providers or end users. Recognition that subsidies may have complex political implications.  Lack of robust data for the ‘halo’ effect on the wider society of interventions aimed at a particular problem  Effect of how products are packaged on determining access by the poorest  The problems of coordinating vertical programmes with horizontal programmes  Lack of support for diagnostic services

6 In addition to these are general similarities between sectors such as the logistical problems of reaching remote locations, often limited knowledge or understanding of the benefit of the product, the customers’ trust in their local contacts, the need to train local sellers, and the need to deliver products or services over the long-term. But the behaviour of consumers of medicines for human ailments will not always be comparable with consumers of veterinary or agricultural products- it depends on what effect the particular problem exerts on the livelihood and wellbeing of the family. b. Transfer, sharing, and development of tools

 Need tools for measuring and assessing mark-ups  Mobile telephony could be used in quality assessment  Need tools for assessing demand for services  Need tools to measure synergies of health and agricultural interventions  Need one-health trial methodologies  Need methods for investigating effects of market failures  Need theoretical frameworks for integrated health-agricultural supply and demand analysis, and for cost effectiveness analysis  Need to integrate tools used by different sectors to disaggregate markets  Need tool to assess contributions of social factors as distinct from market forces c. Some suggested key research questions for future investigation

1. Compare and contrast subsidies in Agriculture with those in Health – as a topic for a future publication

2. How do new products (drugs, seeds etc) get developed and what stimulates this process?

3. Comparison of the important supply chain issues for medical, agricultural, and veterinary products

4. Role of state and of private sector in relation to global provision of products, or financing for products/services, or in handling supply crises. What role should these sectors be playing beyond the MDGs. What bodies should regulate them?

5. Comparison of the current debate on global aid architecture in human health with the global agricultural sector.

6. What are the effects of trade standards and regulation on food safety on small producers?

7. How to address workforce crises and training issues in health and agricultural sectors.

8. How do we effectively bridge between the applied and research sciences to make a meaningful difference in the shorter term at country level i.e. research into practice?