MR Microinsurance_2012_03_29.indd - International Labour ...

Table 12.1
Livestock insurance
expect to rely on for future income fl ows. It is also one of the few assets readily
available to the poor, and especially to women, who have greater diffi culty
accessing other productive livelihood opportunities (FAO, 2009). It is
estimated that close to one billion people, or about 70 per cent of the world’s
1.4 billion people living in extreme poverty, depend on livestock for their livelihoods
(Delgado et al., 1999).
Although the livestock revolution represents a powerful vehicle for channelling
pro-poor growth (IFAD, 2004; Th ornton et al., 2008; FAO, 2009) a major
hindrance to the poor’s engagement in livestock production is their high degree
of vulnerability to the many sources of mortality, morbidity and other risks that
pervade the livestock production and marketing chain. Any disease, accident or
theft of livestock leads to a substantial loss for the household. In addition, huge
production risks associated with dairy activities render animal husbandry a risky
proposition for low-income households. Th e production risks can relate to a
scarcity of input such as fodder or water for the animals, the high morbidity of
individual animals or an epidemic (see Table 12.1). Th e tropical climate and poor
hygienic conditions pertaining in many developing countries are some of the factors
that trigger or aggravate diseases such as mastitis, foot and mouth disease
(FMD) and haemorrhagic septicaemia.
Types of risk in livestock livelihoods
Production risk Price risk
Death, accidental and natural Weak rural infrastructure, e.g. roads,
temperature-controlled supply chain
Disease:
– High morbidity due to epidemics and
variable risks
– Stoppage of milk production due to
diseases such as mastitis and FMD
Problems in input supply:
– Lack of dry and green fodder for animals
– Lack of water during droughts causing stress
Animal death is the biggest risk for poor cattle owners. Since animals often
represent a major asset for a low-income household, perhaps even its most valuable
asset, their death can cause a signifi cant decline in the household’s net worth,
not to mention a fall in income and productive output. If the animal has been
purchased through a loan, the household may have a debt on an asset it no
longer owns.
259
Fluctuations in cost of livestock and products