By Judy Kimani

Livestock value chains are highly complex. Such value chains comprise the full range of individuals, agencies and actions required to bring a given livestock product—whether dairy, eggs or meat—from its original production by a farm or household through its processing and final delivery to, and consumption, by consumers.

Current methods for analysing livestock value chains have not been up to the task of determining the best interventions to make to improve them. System dynamics models offer a solution.

These models, which have long been used to address complex problems in fields outside of agriculture, are actually a family of methodologies based on 'systems thinking,' which treat social and natural systems as an interconnected collection of 'stocks,' 'flows' and 'feedbacks.' By modelling these feedback loops and analysing behaviour over time, a rich understanding of a system can be developed. The model serves, in essence, as a virtual environment where model users can test various assumptions and explore future scenarios generated by relations among a multitude of factors.

Systems modelling has been implemented in several studies to capture, analyse and understand the behaviour of dynamic complex systems.

Within CGIAR, the International Livestock Research Institute (ILRI) has pioneered the use of system dynamics models to enhance the analysis of livestock value chains. These models are used to test scenarios to explore the results of implementing different possible interventions. By capturing the complex interactions of livestock value chains, use of these models provides a deeper understanding of how value chains work, their major performance gaps, and the best options for closing those gaps, where ‘best’ can take economic and non-economic factors and trade-offs into account.

In 2019, ILRI scaled out its use of participatory processes to construct these models in a number of contexts. Such techniques, termed ‘group model building’, involve several focus group sessions with stakeholders in a given livestock value chain. This specific participatory method directly involves 10–15 stakeholders from diverse backgrounds in the model development process. In a series of iterative model building sessions, the stakeholders are guided through a process of conceptualizing and mapping the dynamics that undermine a livestock value chain and identifying those factors that might be leveraged to improve it.

ILRI has pioneered the use of system dynamics models within a participatory ‘group model building’ process to enhance livestock value chains in developing countries.

A team manages and supervises the discussions in as many as four to five separate sessions. The first session introduces the process to stakeholders and includes a short instruction on the concepts of systems, problem conceptualization and prioritization. Building on the problems articulated in the first session, the second session develops an initial model to understand the causes and consequences of high-priority problems in the value chain, using systems thinking techniques that provide a diagrammatic representation of the complex relationships within a livestock value chain. The third and fourth sessions continue the model building process by establishing more structure and incorporating data from both stakeholders and other sources.

ILRI’s experience with this ‘participatory system dynamics modelling’ process has demonstrated its considerable value in unravelling the complexities of small-scale livestock production and marketing systems in low- and middle-income countries. The method fosters significant collaboration, team building and learning among the participants. In addition, by bringing together both women and men playing very different roles and coming from very different institutions across a whole value chain, the method provides a rare means of obtaining data in low-income environments where relevant data is very scarce.

In parallel to the engagement with value chain actors, a reference group of technical experts complements the process. The reference group provides feedback and an external reality check on the process and information collected through regular discussions.

Karl M Rich, an agricultural economist and quantitative modelling expert who leads ILRI’s foresight modelling and policy team, says that he was motivated to use the system dynamics methodology because of ‘the many multi-faceted, multi-dimensional and interacting feedbacks that occur among the biological aspects of animal production, the epidemiology of livestock diseases, the patterns of livestock land use, the dynamics of livestock marketing, and the many institutions that impinge on small-scale livestock systems in developing countries. Each and all of these together influence the uptake and impact of market, policy and technical interventions made to enhance the livestock sector.’

ILRI scientists have utilized an innovation to the group model building process to enable it to characterize the spatial attributes of value chains. This work has helped to determine ‘where’ as well as ‘how’ value chains are evolving, a factor largely missing from conventional analyses. This innovation, termed ‘spatial group model building’, engages stakeholders in identifying value chain characteristics directly on physical maps using participatory geographic information systems principles.

‘Our experience with spatial group model building’, Rich says, ‘confirmed that people are highly visual and identify strongly with place. Using participatory geographic information systems enriches our understanding of how value chains work and helps to establish a common reference point from which to start the modelling process.’

ILRI has employed this technique in scenarios to estimate the predicted returns of various interventions that might be made to enhance livestock value chains. A project funded by Bill and Melinda Gates Foundation and co-led by the University of London-SOAS and ILRI, for example, recently analysed market and technical interventions in vegetable and poultry value chains in India’s state of Bihar and in Bangladesh.

In this project, ‘Market Intervention for Nutritional Improvement’, a system dynamics model was developed to explore pathways to ‘win-wins’ in farmer incomes and the availability and affordability of fruits and vegetables in small rural markets. The model assessed how interventions targeting transport subsidies and cold storage would affect trade-offs between producer livelihoods and the availability of fruits and vegetables.

The initial findings suggest that any ‘win-wins’ will require achieving a delicate balance among options to upgrade the fruit and vegetable value chains. The best options for achieving better nutrition, for example, are likely to lead to poorer economic outcomes for fruit and vegetable producers, and vice versa.

ILRI has also employed spatial group model building in a project funded by the New Zealand Ministry of Foreign Affairs and led by World Vision New Zealand. This project, ‘Thanintharyi Region Rural Income and Livelihoods Development,’ identified and implemented pro-poor interventions in targeted pig and paddy value chains in the townships of Myeik and Palaw, in southern Myanmar. Use of the model showed that small-scale production of hybrid pig breeds should be a highly profitable enterprise for rural households. However, frequent disease outbreaks, the unpredictability of farm-gate live pig prices and a lack of formal credit facilities make this a high-risk livelihood option for many community members. For poorer pig producers, the current structure and loan terms of the financial products on offer result in periods of negative cashflow due to time-lags in pig production. The model showed that periods of negative cashflow were still present even with the introduction of animal health workers and a contract farming arrangement. This insight informed a redesign of the financial products, including the introduction of a ‘grace period’ (deferred loan payments) to combat periods of negative cashflow and ensure that the poorer producers could also engage in upgrading their pig systems.