Presented by Jared Berends, Karl Rich and Michael Lyne at the Asia-Pacific System Dynamics Conference, Brisbane, Australia, 3-4 February 2020.

1. A pro-poor approach to upgrade value
chains in Tanintharyi region of Myanmar
February, 2020
Jared Berends, Lincoln University, Christchurch, New Zealand
Karl Rich, International Livestock Research Institute
Michael Lyne, Lincoln University, Christchurch, New Zealand

2. Introduction
• Agriculture underpins the Myanmar economy; stubbornly high
rural poverty rates
• Small-scale farms in Myanmar are critical leverage points to
improve the livelihoods of farm and non-farm households
• In 2017 Lincoln University and ILRI, together with an INGO
and microfinance partner entered into a consortium to
strengthen rural livelihoods in Myeik and Palaw Townships in
Myanmar with funding from New Zealand’s Ministry of Foreign
Affairs and Trade

3. Introduction
• Pork (and paddy) selected from a short-list
of eight potential products
• SD tools employed to quantify, ex-ante,
possible upgrading interventions,
considering impacts across chain actors
but with a focus on target population of
small-scale farmers
• Selected upgrading interventions to be
implemented within project’s lifetime (3
years)
• Today’s presentation relates only to the
pork value chain

4. Research Methods
• Eight weeks of field-level research in Southern Myanmar including:
• Four participatory Spatial Group Model Building (SGMB) workshops with value chain actors (12 participants,
40% female), including the use of Layerstack (Rich et al, 2018)
• Four Reference Group workshops and FGDs, KIIs, and farm visits to verify and triangulate information
• SGMB developed basic concept models (casual loop diagrams) of key chain problems
• Concept model transformed into quantitative SD models using Stella Architect for scenario testing
• Data analysis across 14 indicators of chain performance and impacts

6. Research methods
• SGMB sessions delivered a consensus on chain
dynamics and feedback loops, producing agreed concept
models
• SGMB participants developed a shared understanding on
how structure and relationships in the value chain shape
behaviour and performance
“Before I believed it was bad behaviour of the brokers
causing low pig prices, now I realise it’s the structure of the
system” Pig Farmer, Myeik Township

7. Output from SGMB: Concept Model
Basic concept modules, with key
feedback loops:
• Investment loop (R)
• Credit/debt cycle (R)
• Horizontal & vertical coordination (R)
• Import substitution (B)
• Technical capacity (R)
• Use of commercial pig feed (R)

8. Model Characteristics
2. Farmer Production
- Village pig systems
(local/hybrid, breeder/fattener)
- Birth to slaughter
- Health/disease component
1. System Pricing
- Calculates Myeik live pig price using inventory model
- Covers regional and domestic demand/supply for different pork products
4. Farmers Finance
- Costs, revenues,
savings and cash flow
- Access to informal and
formal finance
3. Farmer individual investments
- Changing between local to hybrid pigs
- Changing from farrow-to-fatten to
wean-to-fatten
- Change in breeding sow numbers
5. Producer Group and Investments
- Active/inactive and joining/leaving PG
members
- Savings for investments
- Price rebates for members
- costs, revenues and cashflow
- PG investments in training, management,
artificial insemination, and animal health
workers
6. Producer Organisation
and Investments
- PO costs, revenues, and
cashflow
- Investments in upgraded
slaughterhouse facility
7. Farmer knowledge
- Change in knowledge
from training and
interaction with other
farmers

9. Ex-ante impact evaluations
• Baseline
• 640 pig producers across 32 villages in Myeik and Palaw Township
• Disease outbreak and importation ban
• Model Scenarios
• Baseline: No project interventions
• Scenario 1: Project interventions cover all pig producers in target villages
• Scenario 2: Project establishes Producer Groups (PGs) and targets PG members for interventions
• Scenario 3: After five years PGs are upgraded to Producer Organisations with the institutional
arrangements to support ongoing
• Interventions (within scenarios)
• Micro-finance loans
• Animal Health Workers
• Training on hybrid pig production and commercial pig feed
• Artificial Insemination
• Combination of interventions

10. Results: Live pig price
• Continuing oscillations of the live pig price due to demand
shocks (Chinese New Year) and supply shocks (pre-wet
season sales linked to paddy inputs and disease)
• Disease outbreaks cause a sudden reduction in the price of
live pigs due the combination of oversupply in the market
(panic selling) and reduction in consumer demand
• Prices rise quickly and overshoot pre-disease levels due to
low supply and rebounding demand
• Import ban magnifies price oscillations
• Recent pig import ban (ASF) saw price fluctuations following
model’s results

11. Results: profitability of pig farming
• Without the project’s intervention, purchasing one to three piglets for fattening
(Wean-to-Fatten), regardless of the breed, is not commercially viable
• Keeping one to three sows and selling a mixture of piglets and fattened pigs is
a profitable enterprise (Farrow-to-Fatten)
• Hybrid pig systems are four times more profitable than local pig systems;
however they incur significant entry costs and are higher risk and are beyond
the reach of most poor families
• During disease outbreaks hybrid pig farms have periods of negative cashflow
• Hybrid farmers who have taken on debt to finance their upgrading or expand
their businesses are especially vulnerable to dropping out of pig farming

12. Results: Rank order of Interventions
• Across the three Scenarios a rank order for
project interventions emerged
1. Improved credit facilities (high priority)
2. Animal Health Workers (high priority)
3. Training and the introduction of commercial
pig feed (medium priority)
4. Artificial insemination (low priority)
• Evidence of a multiplier effect from the
combination of interventions

13. USD Change (%) USD Change (%)
Scenario 3.1: MFI loans ($100,000) 460,081 3% 1,890,293 85%
Scenario 3.2: Training on pig production 407,658 -9% 1,652,420 62%
Scenario 3.3: AHWs 403,057 -10% 1,833,542 80%
Scenario 3.4: AI Unit 374,978 -16% 1,390,886 36%
Scenario 3.5: Combination 659,315 47% 3,765,188 269%
Short-term Medium-term
Scenario 3 comparison of profits of all pig producers in target villages compared to baseline
Results: Rank order of Interventions
In isolation interventions bring modest or
negative impacts in the short-term.
Combination of interventions ensures
short-term positive results
• A well-sequenced combination of interventions ensures short-term positive outcomes and
strengthen medium- and longer-term results for small-scale farmers

14. Results: Potential negative impacts of credit
• Current financial products
available from micro-finance
partner may cause liquidity
problems for producer groups
• Periods of negative cashflow
are exacerbated by disease
outbreaks and results in poorer
producers ceasing pig farming
and dropping out of Producer
Groups
• Especially relevant given the
likelihood of ASF outbreak in
Myanmar

15. Results: Scenario testing
• The collective action module allowed scenario
testing with different types of producer
organisations and varying institutional
arrangements
• The Producer Group module built on the work of
McRoberts et al (2013) and added price rebate
and savings stocks
• Savings rates are driven by profitability of
Producer Group enterprises and capacity short-
falls
• Savings takes priority over rebates, but rebates
allow Producer Group membership to maintain
competitive compared with non-membership
Producer
Group
cashflowRevenue
Costs
Producer
Group savings
Savings
Producer
Group price
rebates
Securing price
rebates
Investing in Producer
Group capacity
Covering funding
shortfalls
-
+
Producer Group
assets capacity gap
+
Profitability of
capacity investments
+
Savings rate+
+
+
-
Desired Producer
Group balance
+
Maximum
flexible cash
-
+
+
+
Paying rebates to
members
+

16. Results: Scenario testing
• Institutional arrangements that reward
small-scale farmers in proportion to
their patronage and investment
delivered higher levels of reinvestment
in the organisation and larger profits for
members
• Investments in the capacity of producer
organisations enabled poorer members
of the community to engage in Hybrid
Wean-to-Fatten pig systems and then
transition to the more profitable Hybrid
Farrow-to-Fatten
• Investing in producer organisation will
extend the reach and sustainability of
the project