A socio-economic evaluation of the supervised cattle distribution program in the Philippines

Duthy, Stephen (Stephen W.) (2005). A socio-economic evaluation of the supervised cattle distribution program in the Philippines PhD Thesis, School of Economics, The University of Queensland.

       
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Author Duthy, Stephen (Stephen W.)
Thesis Title A socio-economic evaluation of the supervised cattle distribution program in the Philippines
School, Centre or Institute School of Economics
Institution The University of Queensland
Publication date 2005-06
Thesis type PhD Thesis
Supervisor Steve Harrison
Alan Duhs
Derrin Davis
Total pages 476
Language eng
Subjects 340000 Economics
Formatted abstract This thesis reports the findings of a socio-economic evaluation of three government livestock distribution programs (LDP) in the Philippines with a particular focus on the Supervised Cattle Distribution under Coconuts Program (SCDP). The three LDPs were initiated by the Bureau of Animal Industry, in the Philippine Department of Agriculture. In each of the programs, cattle purchased by the Philippine government are provided to smallholders, the difference between programs being in the manner in which loans are repaid. In the SCDP the loan repayment is made by transferring the loan cow to a new beneficiary after its first calf has been weaned. In a similar program, the Barangay Livestock Breeding Loan Program (BLBLP), the loan cow is retained after its first calf is weaned and the loan repayment is made through the transfer of that calf, or a replacement female calf when the first calf is male, to a new program beneficiary. In the third program – the Multi-Livestock Development Loan Program (MLDLP) – the value of the cow must be repaid in cash plus 10% interest.

The evaluation uses two approaches to non-market valuation – the contingent valuation method (CVM) and an innovative combination of CVM and conjoint analysis (CA) – to estimate the non-productive benefits obtained by smallholders through participation in the LDPs. The nature of the programs and the socio-economic circumstances of the program beneficiaries presented a set of problems that are clearly different to those normally encountered in non-market valuation studies. Program beneficiaries were selected for the programs because of their low level of income, which places a severe constraint on their willingness-to-pay (WTP) for program benefits. Program rules place restrictions on the sale of program cattle, making it difficult to use the sale of the loan cow or calves produced under the
program as a payment vehicle to allow estimation of consumer surplus derived from program participation. To overcome these constraints, a certificate of participation was devised to represent the bundle of rights and obligations respondents have through belonging to the respective program. Respondents were asked the price at which they would be willing to sell the certificate in order to estimate of the benefit obtained from the program.

The results obtained using the contingent valuation method (CVM) are compared with thoseobtained from the combined CA/CVM approach of nine alternative program designs, represented by nine cards that used coloured photographs to illustrate the difference between program alternatives. Respondents ranked the cards in order of preference and were asked follow-up questions seeking valuation of their most and least preferred alternative. In both approaches, an open-ended question eliciting the respondent’s willingness-to-accept compensation (WTAC) for loss of program involvement was used, this format closely matching respondents’ experiences in livestock trading.

The valuation of most and least preferred program design alternatives produced a dataset with systematic missing data because each respondent was required to estimate a value for only two of the nine cards. To overcome this problem, results were analysed using residual maximum likelihood. The results obtained from CA provide the more credible results because respondents appear to have included the value of program cattle in their CVM estimates. The CVM estimates were, on average, PhP9667 higher than the PhP17,404 obtained using the CA/CVM approach.

A cost-benefit analysis (CBA) of the performance of the SCDP reveals a small net social benefit from the program at a real discount rate of 12%, despite an initial calving rate of distributed cows of just 12%. The thesis explores means by which the cost-benefit performance of the two in-kind livestock distribution programs might be improved, through the development of two models. In the first model, two repayment schemes are compared while in the second, a number of program design changes are presented which would allow the programs to continue beyond the approximately eight years of calf production of the foundation cattle.

The thesis provides new insights into the socio-economic performance of cattle distribution programs through the use of an innovative adaptation of non-market valuation in the task of performing program evaluation. It also demonstrates that complex socio-economic research can be undertaken despite the difficulties involved in carrying out this type of work in a developing country where differences in culture and language require particular emphasis on striving towards a common understanding of difficult and unfamiliar concepts.
Keyword Rural development -- Philippines -- Evaluation
Cattle -- Economic aspects -- Philippines
Additional Notes Variant title: Socio-economic evaluation of cattle distribution

 
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