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Will Bill Gates’ chickens end African poverty?

June 23, 2016
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hanlonJoseph Hanlon and Teresa Smart are unimpressed by a new initiative, but teresa-smartdisappointingly avoid all the potential excruciating puns

Bill Gates announced on 7 June that he is giving 100,000 chickens to the poor because chickens are “easy to take care of” and a woman with just five hens in Africa can make $1000 per year. For Mozambique where we work, this is remarkable – fewer than 2% of Mozambican farmers make $1000/year. What a wonderful idea. Why did no one think of this before?

Actually, they did. For a decade, Mozambique has had its district development loan fund, known locally at the “7 million” because the initial fund was Meticais 7 million per district. Most farm families have chickens running around, and one of the most common requests for loans from the fund is from people who agree with Gates that chickens are “easy” and they want to expand to commercial production. Nearly all fail, and cannot repay their initial loan. Perhaps the problem is not the initial five hens.

Ed Wethli, an old friend who worked with chickens in Mozambique, says Gates is half right. “Village bill-gates-chicken-plan_759chickens are the true ‘free-range’ chickens in that they wander around wherever they like with no boundaries, often roosting in trees at night. They find most of their own feed, are good at hatching and mothering young chicks and they have the ability to survive under harsh conditions.” They are an important part of local life, and are a valuable food source as well as being used as gifts and for ceremonies. And a few are sold to neighbours.

The problem is scaling up to commercial production, with larger flocks that no longer live in trees but require coops, feed, and treatments to prevent parasites and Newcastle disease. And they require markets. Small chicken growers in Mozambique usually fail because they cannot produce at a cost below those of the larger growers. In even remote local markets, frozen chickens produced in Mozambique or imported from Brazil and South Africa are cheaper than local live chickens. Local chickens taste better, African chicken retailbut they are a luxury product. And margins are tight – to make a profit a farmer must be able to grow and sell the chicken in five weeks; if it takes just one extra week, then all the profit is lost to extra feed costs. With veterinary and other technical support, village chicken production can be made profitable, although more at the level of $100 per year rather than $1000. But in Mozambique, that kind of support is rarely available.

Over three decades, Brazil developed an entirely different model. With intensive support by the Brazilian development bank BNDES and tight regulation by the government, Brazil has become the second largest chicken producer in the world and the largest exporter. The chickens are raised by tens of thousands of family farmers, but on a contract basis to large companies which provide day-old-chicks, feed, medication, technical assistance and, most importantly, a guaranteed market.

There are two lessons here. First, this industry was not created by the private sector, but by long term intensive investment by the government – it is the state the builds capitalism. Second, small family farmers can be more effective than large producers, if they are integrated in a value chain.

Fifteen years ago most chickens on the market in Mozambique were imported, mainly from Brazil.

Nigerian chicken farm

Nigerian chicken farm

Neoliberalism was still in force and donors and lenders would not let the government intervene in agriculture. But two US NGOs, TechnoServe and Clusa (Cooperative League of the USA – many people do not realise that in the capitalist US, a majority of farmers are members of cooperatives), began work to build local chicken production and local soya growing to feed the chickens cheaply. By 2008 local chicken production exceeded imports. It took another four years of intensive, on the ground, work – cutting costs and losses and introducing more productive chicken breeds – to build the industry up to the point that the private sector was interested. Now the most effective producers follow the Brazilian out-grower model, with families rearing the chickens and a central company providing day-old-chicks, feed, medication and markets. Indeed, it was so successful that we called our most recent book Chickens and beer: A recipe for agricultural growth in Mozambique.

The best family farmers are now earning $750 per year, which in Mozambique is a lot of money. Unlike Bill Gates’ five hens or the families who try to expand with loans, these farmers receive hundreds of day-old-chicks, an effective support package, and are sure of being able to sell what they produce. And those chickens on the market are less costly than Brazilian imports, providing an inexpensive source of protein to local people.

Chicken distribution in Burkina Faso

Chicken distribution in Burkina Faso

But knowing what works is not useful, if it is “wrong” – in this case because it was neither charity (giving away hens) nor the private sector, but an intensive development effort by what might be called “the international public sector”. However, the international financial institutions are now stepping in to correct the situation. Odebrecht, the giant Brazilian construction company (whose boss was jailed for 19 years in March for corruption) has already received $550,000 from the Agriculture Fast Track Fund (set up by the US, Sweden and Denmark) and the Africa Development Bank to plan an $82 million installation to go from field to fork, producing maize and soy for feed; having a hatchery, slaughterhouse and processing plant; and marketing. It hopes to raise money from the World Bank’s International Finance Corporation and produce a quarter of Mozambique’s chickens. If successful, the project will put out of business thousands of Mozambican small commercial chicken producers, who could not compete. Is this really the best way for the World Bank and African Development Bank to promote development?

As usual, the aid industry can only see the two extremes and ideas that come from outside – Bill Gates’ five hens or Odebrecht’s millions of chickens. The successes in the middle, and the successes developed locally, are ignored. In Mozambique thousands of Mozambican farmers are already raising their income by producing good value chickens – but that does not grab headlines. So let us hand out hens instead.

Joseph Hanlon is visiting senior fellow at the London School of Economics and visiting senior research fellow at the Open University.

Teresa Smart is a senior research associate at the Institute of Education, University College London.

P.S. The Bolivian government was also underwhelmed by the chicken offer.

13 comments

  1. In 1972 I began field research for my PhD into new ideas in farming in the hills north of Abbottabad, Pakistan. One of the innovations was broiler chicken farming and it was one of my tasks to select 100 small farmers who would be provided with 500 day old chicks. Appropriate housing, food, medicine and advice were provided by Arbor Acres, one of the world’s largest broiler chicken companies at that time and farmers repaid these costs over several production cycles. Most of the farmers involved made a small profit each season. Marketing was looked after by the company. An almost immediate problem was the production of large quantities of chicken waste and we devised a methane gas digester system to make use of this waste. The gas was piped into farmers’ homes providing energy for cooking and lighting. I have not been back to see whether ‘my’ farms are still producing broiler chickens or whether the area now has alternative supplies of energy.

  2. Neither Bill Gates nor Heifer International are giving out details of what they intend doing. The type of chicken distributed to rural village households is particularly important. Introducing exotic breeds and varieties on a large scale to the traditional extensive system could destroy the system (in existence for over 8000years) principally because these breeds do not go broody (sit on eggs to hatch them). So from where do they get that these households will be able to produce 40 chickens from five hens in three months? Unless they are going to introduce small incubators and that is another whole problem.

  3. I have been working in rural Tanzania for seven years and I supervise 3 egg-production small businesses. We implemented a successful production model inspired on the Brazilian integrated system called PAIS and have been carefully increasing the number of chickens and scaling production while we develop new markets for our high quality eggs. Scaling the business is very difficult and although it is true that chickens are somehow easy to handle, business risk is high for a small scale producer as cost is high and each chicken carries a significant financial and time investment. In order to make production financially self-sufficient, a minimum of 70% of the business profit needs to be dedicated to reinvestment in a new chicken flock. That means that the producers need to have sizeable savings to bare business risk.
    Every once in a while our egg businesses suffer with flooded markets and unfair competition, many times generated by organizations that start “chicken projects” and subsidize production, bringing low quality cheap eggs to the market that pull down the egg prices and make their production inviable.
    When I read Bill Gates’ article I found it shallow and arrogant. The solution proposed seems to lack creativity and underestimates the challenges faced by smallholder farmers in developing countries. I understand where the assumptions come from and I know for sure that when inquired on an easy path to leave poverty, thousands of smallholder farmers would answer “chickens”. I think the main issue may be that there is no easy path to leave poverty and if you flood the market with any product you decrease prices and kill small scale producers that have been dedicating themselves to their businesses for a long time.

    1. Thank you Ana for your input here.
      Poor chicken has undergone several terminologies and nomenclature – “local chicken” or “imported chicken” or “exhortic chicken”. Several names for one specie of bird. One of the other missing line of thoughts have been, what are the effects of other forms of poultry or bird rearing enterprises (turkey, ducks, pigeons, geese, guinea fowl). many of these are reared at household level and have immense contribution to household nutrition. I think the key issues in this discuss should not be to focus alone on the economic values of poultry chicken production, but to consider the market and enterprise from a wholistic point of view.

  4. From my experience in Madagascar, the education of smallholder farmers as to how to properly look after their chickens including appropriate use of inoculations is alleviating poverty and enhancing livelihoods. For the 80,000+ vanilla farmers in the SAVA region, receiving 5 chickens and the education to nurture the chickens would make a real difference.
    It is at the small scale “village chickens” level and not mass commercialisation that the biggest impact will be made. Dietary diversity is assisted, incomes are supplemented and the chickens are not competing for food with other farm produce.
    In rural Madagascar villages very few homes have electricity, never mind the luxury of a freezer!
    So it may be fashionable to criticise the B&MGF and take pot shots at Bill Gates himself, however at least be clear that his idea to give 5 chickens to a family may produce real benefits and make a significant contribution. Not all countries, communities and chickens are the same!

    1. Very insightful and thoughtful comment, Hamish. More people need to see the project from this perspective to understand that any effort is a step towards alleviating poverty.

      – Year 12 Geography class, Australia.

  5. Sorry, an additional comment.
    Having read the Bill Gates article, there is nothing (that would be ‘0’ like the egg of a chicken) wrong with what they are saying. We have been studying the incomes and expenditures, the dietary and nutritional needs of Malagasy smallholder farmers and everything that is in the Gates note is 100% TRUE. I am just kicking myself that the project is now closed as we have been looking for ways in which we could tap into the B&MGF to strengthen our efforts on the ground – for the poorest family households, owning a few chickens lifts them above the poverty threshold and particularly assists them to enjoy dietary diversity during the “lean season”.
    If Gates had been advocating mass commercial production then the authors’ comments may very well be true (and I certainly do not have the expertise to contradict them on the mass scale). However Gates was not pushing for mass egg production initiatives, his suggestions all make sense and quite honestly we have the data to prove it, including the contribution of chickens to the smallholder farmers incomes. The concept of Living Incomes would be boosted immensely by such a chicken project in the areas and regions in which I am working.
    Therefore sorry but shame on the authors for putting across a rather one-sided diatribe that does not include other countries or situations that could directly benefit from such philanthropy. Really quite disappointed that this should appear in an Oxfamblogs situation without better quality investigation – the Oxfam name carries a lot of weight with it, therefore many people will believe the assertions being made immediately and sorry the authors are wrong and they are sniping away in an unhelpful and inaccurate manner.

  6. Ana, how nice to get some realistic information from someone with experience on the ground. However, as I understand it, Bill Gates is not talking about commercial scale production, not initially, at least, but about improving the nutritional and economic lives of African rural households where the poorest depend on chickens for various functions and the poorest of the poor do not even have chickens. So, if properly done, the Gates intervention could certainly affect the lives of some rural folk.

  7. I can only speak about my experience in Tanzania. Here people have chickens but don’t eat eggs or chicken meat as they prefer to sell both to generate income (unless there is a wedding or funeral going on). In the three small businesses that I supervise we had to put a rule to have every smallholder taking half a tray of eggs at the end of the month for consumption – and sometimes they still sell those. Most families here have chickens seasonally as chickens are sold for almost nothing at every “hunger season” as the one that we are living now — basically people keep the chickens to sell when conditions are bad, it’s like a savings account with the issue of decreased value because buyers pay less for the chickens when they know that people are in need of urgent cash. So in terms of nutrition diversity there would need to be some work done, at least here, to teach people how to benefit from the chickens regularly.
    There is probably no harm in giving 5 chickens to every family, I don’t question that. My issue is with the way it’s been announced. Saying that 5 chickens/person would end poverty is naïve, poverty is more complicated than that. And five chickens generating $1,000/year and enabling a family to buy a cow within such a short period of time is definitely not true, at least not in the reality that I see in rural Tanzania – maybe it’s different in other countries.

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