Livestock Development: A New Public Management Approach – Application and Challenges

July 3, 2012

Talks & Interviews

Mohammad Jehanzeb Khan

: Mr. Mohammad Jehanzeb Khan, Secretary Livestock & Dairy Development, Punjab was invited by the CPPG to deliver a talk on “Livestock Development: A New Public Management Approach – Application and Challenges” on April 13, 2011.

Secretary Khan opened his remarks with an introduction to New Public Management (NPM) and its relation to the livestock sector. NPM emerged from the very idea of government’s response to citizen demands and needs. The governments in the developed world having levied high direct taxes were pressurized by the citizens to reciprocate with better quality services and thus had to improve the efficiency of government departments. However, a somewhat different reason of low revenue generation led developing countries like Pakistan to undergo a series of reforms to provide the required public services.

Further exploring the terms ‘reform’ and ‘public service’; he stated that generally the word ‘public service’ meant the provision of services by the government and the kinds of services depended on societies’ own evolution through democratic processes. He opined that there was some consensus on what formed the core services; such as maintenance of law and order, clean drinking water, healthcare, education, pollution free environment etc. These were public goods and were expected to be provided by the state. This risk of market failure had led governments to sometimes create natural monopolies for the provision of public goods. But under the NPM approach,the governments of today were more concerned with outcomes rather than processes. Thus it was immaterial whether the government provided education services, built and managed schools itself or instead used other service providers for the same task as long as outcomes of education provision were fulfilled. He argued that if the government managed these services, then it had to delegate it to managers with the right technical and professional capacity without hindering their work through tedious processes and procedures. Discussing ‘reform’, he suggested that given the inherent complexity of public departments, and an evolutionary process of organizational change and poor service quality, there was a need for a continuous process of reforms. He added that today’s governments were more sensitive to outcomes.

Khan then specifically delved into the NPM approach used in the Livestock Department. He emphasized the separation of policy from operations. Citing examples from the private sector whereby the board of directors, the policy arm evaluated the management’s performance based on set implementation targets. A performance management system helped both in terms of empirical analysis as well as in providing the right controls for people to do their job. The NPM approach was also about creating linkages and new partnerships to achieve desired outcomes as it looked at the society in totality as one system.

“…the customers included 35 million subsistence farmers who could be helped if they were better organized and given control over their needs which included extension services, access to credit, technology and various required products”

Historically, the Livestock Department had been an animal health department. Though animal health continued to be an important part of livestock but livestock development involved a lot more. Thus given the historical development of departmental policy and with no one in the government specifically looking at the policy domain, it was perceived that a right policy alone would be a contribution comparable to the fleet of operations run by the department because of its sheer impact. For example, the ‘price cap’ policy on meat created far-reaching disincentives for meat production as the prevailing policy did not cover farmers’ operational costs leading to a potential decline in investment as farmers were less inclined to keep animals for the purpose of meat production on prevailing prices. Similarly, exploring the regulatory framework was a new area and the department was ill-equipped to analyze it. For example, when confronted with the question to allow exports of live animals, it had to be analyzed whether it helped the farmer and the sector or had negative consequences. Although the decision had to be taken at the federal level, the Punjab as a key stake holder would have liked to provide a rationale for policy choice based on detailed analysis. But Punjab was not able to give policy advice because the department did not have the capacity to conduct the needed analysis.

Other than the day to day operations, the department also made public investments in the livestock sector courtesy of the annual development program. The main question in this regard was whether these investments were helping the livestock sector and if they were smart investment, that they gave the biggest bang for the buck given the department’s scarce resources. Thus out of a 100 things that needed to be done, few public good initiatives were selected. But even public goods could be divided into core or semi public goods given the ideological nature of assessment. Thus investments were made in core public goods while ensuring that semi public goods would be catered for after government’s withdrawal through facilitation and help of the private sector. Historically, there had been a tendency to continue doing things even if they were done better by the private sector, for example, the department had been involved in the processing of milk and production of feed. This approach was changed.

Presenting the livestock resource of the country, he stated that the Punjab Government had more of a focused responsibility to work in this sector because of its existing resource base and the opportunities it presented. Mr. Khan outlined the core objectives of the department as alleviation of poverty, food security and exports for revenue generation. In terms of poverty alleviation, the customers included 35 million subsistence farmers who could be helped if they were better organized and given control over their needs which included extension services, access to credit, technology and various required products. The second key area was productivity enhancement which comprised of improved genetics for better yield, the right nutrition, and proper housing and health care for longevity of productive life.

“This risk of market failure had led governments to sometimes create natural monopolies for the provision of public goods.”

Even if the products were taken care of, the markets had to function properly because a lack of efficient markets would lead to an unfair price for the producer decreasing production. Markets needed to determine price based on measureable criteria, such as weight if the animal was for meat or milk production if for dairy, but instead the existing market prices were on hearsay. This led to increased distressed sales for the producer hampering future investments in the sector. Additionally, the department was also cognizant of the fact that the overall growth of the livestock sector was linked to the growth of private enterprise as enterprise development could lead a transition from subsistence to profit oriented activity. The department needed to facilitate private enterprise to speed up this transition.

Discussing the focus and priority areas for the department, Khan showed how work in the sector was distributed among the public, private and the non-profit sectors with the public sector mostly dominating. While the policy & regulatory work, disease surveillance & control, both public goods and funding for research & development had to be managed by the government, genetic up gradation, commercial live stock farming, technology, marketing and processing value addition should be picked up by the private sector. In this context, the department had a big debate on whether or not to build a huge slaughter house outside of Lahore? However, after due deliberation it was resolved that since it was a public and food safety issue, citizens were not getting quality meat and a lot of slaughtering by product was being wasted; therefore the department went ahead with the project wanting to bring in intricate change to this sector while exploring how to eventually withdraw from it. Simultaneously, the department chose to ignore the new private sector slaughter houses which were not allowed under the law. The rationale for this policy choice was that the quality of product from the private slaughter houses was much better than what existed in the public sector. Poultry feed production had been taken over by the private sector and thus deliberations are in process to close the feed section and instead concentrate on monitoring feed quality.

“The NPM approach was also about creating linkages and new partnerships to achieve desired outcomes as it looked at the society in totality as one system”

Similarly other areas in the sector such as human resource development (HRD – veterinary doctors, paramedic and livestock workers) and extension services were government dominated purely on the account of history and required private sector capacity building and collaboration to improve both quality and reach. Given the high priority of HRD and an understanding that veterinary education required huge investments while students normally came from rural and humble backgrounds, government setup numerous teaching and research institutions. Additionally, the government extension services while having a good reach were questionable in terms of quality and could gain tremendously in partnering with private sector players such as farmer associations, Nestle, Engro and others. But public sector involvement could also disincentivize private players by creating market distortions. Thus, to ensure quality service provision, the government could either buy services from the private sector or subsidize them to fill the affordability gap for farmers.

Emphasizing the importance of government’s role in disease surveillance and control as an insurance against epidemic outbreak, Khan shared the details of the revamped departmental function. The traditional system of a network of small animal health centres across Punjab providing service from 8am – 4pm was curative in nature. It did not work in the case of emergencies and off peak hours while also requiring farmers to take their ill animals to the centre. This system had been revamped to a preventive door to door public sector service provision system and though farmers bore part of the treatment fee because of the government’s resource crunch, they were still happy to get the service at their door steps at all hours. However a draft of the Animal Disease Act obliging the farmer to disclose the disease for the government to step in to destroy animal population was pending before the cabinet. He argued that even if the government closed down this segment of the department, the services would continue in the private sector but the epidemic risk factor would increase as disease surveillance being a public good would not be owned by the private sector. He further credited the department’s revamping for controlling the outbreak of bird flu as well as an epidemic during the recent floods. Further elaborating, he stated that the department had an established expertise in vaccine production and was both the biggest producer as well as consumer of the product, thus the vaccine was not independently verified or at par with international standards. Additionally, the vaccine factory was run like a government department. It ran out of money during floods, exhausting its budget and quota, and could not produce a vaccine there after for three months because of a lack of inputs required for production. He also stressed on the need for legislation.

Khan also spoke about the need for re-defining the department’s policy domain to re-cast the operational scope and to prioritize functions. He claimed that all major stakeholders including academia, industry and farmer associations were consulted during a 15 month period and a detailed deliberation process took place within the department outlining existing functions against management capacity. Operationalizing the NPM framework, the department offered autonomy to the Poultry Research Institute. The department introduced a simple internally created performance management system conducting performance evaluations of personnel in the districts every quarter based on indicators such as vaccination coverage, artificial insemination targets etc. The department initially penalized the lowest 5 performers. But in the next cycle, the district team sat down to discuss how their performance could be improved and were surprised by the issues raised. The issues were resolved while the top five performers were sent to Thailand for a training course. New regulatory initiatives included a Milk & Meat Safety Agency to define and implement standards, and provide traceability from farm to food so consumers could know what they were consuming, and the Semen Quality Control Act. Government very recently was the only breed improvement agency in Punjab with 4 production units making 2 million dosages while the private sector had now established 16 units producing 1.2 million dosages. But there was a dire need to regulate and establish standards to support the private sector and to ensure farmer security. He asserted that the department had started a help line and a short messaging service to inform and get feedback from its customers; which in turn had improved the department’s ability to monitor its staff and improve productivity.

Khan concluded his talk by identifying the major challenges to reform; first, an absolute resistance to change within the department, other departments and the wider society as the most important as incomprehensible reasons were often provided to scuttle new initiatives. Second, the Civil Services did not have the temperament or training to engage other societal stakeholders. Third, any drive for further autonomy was unwelcomed autonomy because it led to tougher work conditions and accountability impacting the existing comfortable job routine (Poultry Research Institute, a case in point). Fourth, administration and financial systems were very rigid. Fifth, inter-governmental challenges rose from the Planning and Development Department, the Finance Department and the public representatives. The media often overlooked the details of reforms while a citizen could get a court stay order to delay or halt the entire reform process. Lastly, he stated that leadership was required at every tier within the department as a critical mass of people who became champions of reform were needed while engagement and explanation were keys to bringing people onboard. But lasting change required behavioral change.

The talk was followed by a Question & Answer session. In regards to a question linking tenure with institutional reform and productivity, he agreed that the crises of management were because of a lack of continuity. He had been at the helm of the department for 2 years and 7 months now while the tenure was usually 3 years which had a lot of wisdom.

Answering a question regarding regulation for vaccines, he stated that no government produced vaccine currently abided by the regulatory standards of the Ministry of Health. Punjab had three options: one, invest in own veterinary institute to upgrade it where it could be registered which was only possible when certain short comings are removed but he was skeptical that the public sector could achieve this; two, privatize it which would raise the price of vaccine; three, the department was currently in discussion for a public private partnership (PPP) rehabilitate, operate and transfer contract which could achieve the objective.

“…government extension services while having a good reach were questionable in terms of quality and could gain tremendously in partnering with private sector players…