LSIRD NAPLIO CONFERENCE PAPERS

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Economic constraints on the development of livestock

production systems in disadvantaged areas

Kostas Apostolopoulos & George Mergos

Disadvantaged areas are characterized by poorer resource quality compared to other rural areas, by remoteness and distance from the main population centres, and are mostly concentrated in hilly and mountainous areas. They experience strong depopulation trends, economic decline and deterioration of their social fabric. Although there are disadvantaged areas in many parts of the world, this paper focuses on such areas of Southern Europe. Livestock, mainly of extensive type, is one of the main economic activities and is considered as a potential development option for such areas. The purpose of this paper is to examine the economic constraints on the development of livestock production systems discussing alternative policy options in the context of reversing the trend of economic decline of disadvantaged areas. The complexity of the problem, however, requires, first, understanding the nexus of the issues, hence, the role of livestock should be considered in a wider economic and social development context, on the basis of which to derive policy conclusions. The paper identifies increasing productivity and efficiency as the main strategic objective for achieving sustainable development and for reversing the trend of decline in disadvantaged areas. Increasing productivity and efficiency of livestock systems can be achieved by increasing technology of production, mainly reducing labour requirements, reducing distance costs by improving transportation, communication and marketing channels, and by encouraging endogenous development and local initiatives in addressing issues of management of common property resources, training, and financial constraints.

1. INTRODUCTION

Disadvantaged or less favoured areas, despite strong heterogeneity and wide variation of physical resource endowments, are characterised by poorer quality of resources compared to other rural areas, by remoteness and distance from the main population centres, and are mostly concentrated in hilly and mountainous areas. Disadvantaged areas of Southern Europe although quite diverse, due to their historical, cultural and socio-economic development, share common characteristics in their social organisation, economic structure, and cultural identity that determine the observed common trends of strong depopulation, economic decline and deterioration of their social fabric. The depopulation of these areas, experienced mainly in recent decades, is the result of a rapid, but regionally uneven, economic development, the mechanisation of agriculture and the attraction of the people to the social life of the urban areas. Nevertheless, no conceptual framework is available up to now to be used for analysis and choice among policy options.

Agriculture, along with livestock, forestry, and tourism are the main employment generating activities. Agricultural production and other economic activities have been adversely affected by the depopulation of disadvantaged areas with significant land acreage been abandoned from cultivation, leading further to the abandonment of other economic activities. Extensive livestock production is sometimes considered as a potential development option. However, livestock production, as an important economic activity in such areas, cannot take advantage of such decline in cultivated land because of several economic constraints, that do not allow expansion and development. As a result, transhumance extensive livestock production systems, although maintained, experience, also, strong decrease in livestock numbers, moving to rather more permanent establishments close to urban centres.

During recent decades several changes have been observed in the economic and social organisation of mountainous and less favoured areas as a result of the operation of the Common Agricultural Policy (CAP) with measures supporting agriculture (Com.Dir. 268/75, 797/85, Mediterranean Integrated Programmes); further, several changes have been induced in their economic and social environment by the increase in tourism, mainly from urban dwellers who are originally from such areas, by administrative changes, by the increase in the demand for traditional livestock products, and by the development of transportation and communication infrastructure.

Certain programmes, such as the LEADER I and II, encourage the development of alternative forms of tourism (agro-tourism, eco-tourism, etc.) along with the production of traditional quality products from traditional production systems with environmentally friendly methods. Such activities promote local endogenous development in less favoured areas, by increasing their competitiveness, while maintaining their ecological resource base.

Past efforts, however, to sustain economic and social life in mountainous rural areas have been partial. What is needed is a more integrated approach to create an endogenous, sustainable development that would strengthen and diversify economic activity, encourage social cohesion while maintaining cultural identity and initiating a renewed socio-economic revival of the areas. For this reason the characterisation of the development problem of these areas is necessary, together with the identification of the economic constraints.

Production systems are always in an interaction with their economic and social environment. Such interaction is more pronounced in disadvantaged areas that experience rapid decline and important adverse changes in their economic and social organisation. A major challenge is, then, to characterise the problem and suggest policy options in the development of productive sectors that would reverse the economic decline and will generate a process of sustainable development in the disadvantaged areas.

The development of livestock production faces strong economic constraints limiting capacity to provide higher levels of income and employment to the population. There are five types of such constraints comprising factors related to: (i) labour and employment; (ii) management; (iii) grazing resources; (iv) relations with forests and the environment; (v) available infrastructure. The nexus, however, between livestock development and economic well-being of the population in the disadvantaged areas, needs to be understood in order to derive strategic and policy recommendations.

This paper starts with a detailed review of the economic constraints on livestock production in disadvantaged areas and its role in their economy and society. It continues with the conceptualisation of the development problem of the disadvantaged areas aiming to understand the interactions between livestock development and the overall economy and resource availability of the areas. After identifying labour productivity and efficiency as a major strategic objective in raising incomes and sustaining employment in disadvantaged areas, it considers alternative strategic and policy options The paper concludes with strategic and policy recommendations for livestock development in disadvantaged areas.

1. ECONOMIC CONSTRAINTS OF LIVESTOCK PRODUCTION

Livestock production systems are attracting research efforts of economists and production specialists alike because of the increasing interest on the interaction between productive systems and their economic environment. Such interaction is more pronounced in less favoured areas that experience rapid changes in their economic and social organisation. Livestock production systems in South Europe are classified in intensive, semi-intensive and extensive systems, depending on the amount of capital used in production, as well as in confined, semi-confined, peasant-static, peasant-moving, and transhumance, depending on the livestock management method used.

The confined and semi-confined livestock production systems are characterised by the operation of permanent stable structures, combining in certain cases livestock and crop production and use of produced feed resources rather than grazed communal land resources. In Southern Europe, frequently used production systems are peasant flock and herd raising, using very light housing structures further away from the home of the livestock producer, grazed in communal land resources. Livestock feeding is based on grazing with supplementary feeding during the winter months. The transhumance livestock production systems represent a more recent development of traditional nomadic systems and are characterised by seasonal movement of the herd (or flock) to mountain grazing lands in the spring and the summer. Livestock producers of this production system are almost entirely transhumance in their life-style and tradition, without any interest in crop production.

The integration of the above livestock production systems with other agricultural production in the agricultural areas of Southern Europe has attracted significant research attention within the context of wider studies of production systems in Europe. Of particular interest are the production systems of the less favoured areas in Southern Europe because of the marginalisation of such areas due to their physical (soil, climatic, etc.) and socio-economic characteristics.

Less favoured areas of Southern Europe, mountainous, remote and island areas, are experiencing strong pressures on their resource base, a rapid depopulation leading to a strong decline of their economic and social life and in many cases an increase in tourist activity. This paper attempts a characterisation of livestock production systems in the less favoured areas of Southern Europe with particular emphasis on the economic constraints facing their development and their contribution to the economic and social well-being of the population in these areas.

It is a fact that all references to productive systems in disadvantaged areas are primarily related to the extensive systems of the sheep and goat breeding, and secondly to the extensive system of the herd meat producing cow-breeding (Boyazoglou and Flamant, 1990, Hatziminaoglou et al, 1995, Apostolopoulos et al 1985, Apostolopoulos and Papadimitriou, 1990). This fact derives equally from the historical practice of these systems and from the relevant research that has been conducted on this subject by expert scientists. As disadvantaged areas are defined those areas of the Southern Europe's massifs that meet the corresponding requirements of the European Union's directives.

As to the productive systems of omnivorous animals (pigs, broilers), they fall almost exclusively in the category of the intensive breeding and so far they do not present any particular interest as systems of extensive breeding of these animals. An important economic constraint to these systems is the lack of differentiation of their products from the products of the businesslike mass production breeding, as far as their price is concerned. The extensive, small-scale aviculture, might constitute an exception, if it is combined with the servicing of agro-tourist lodgings (provisioning them with traditional and ecological products).

The main economic constraints of the extensive breeding of the ruminants in disadvantaged high land areas can be grouped into the following general factors.

Labour related factors

The man, as the main contributor to the animal production, influences restrictively the development of the mountainous regions; this happens because the profession of the sheep and goat breeder (or that of the boos breeder) never was, and still isn't particularly appealing to the people of the mountainous, rural areas and especially to the young ones (at least those still remaining). Undoubtedly, there are social reasons behind the unwillingness (or even the aversion) of the young people to follow the profession in question. The problem is not at all recent; on the contrary, it is very old but in our days it becomes more intense, regardless of the increasing unemployment among the youth, due to the continuously changing mentality in favour of urban (and less strenuous) professions. It is a fact that the labour needs in a sheep and goat unit are rather unstable during the day, but also the year, with extremely irregular working hours.

This situation worsens even more, if one takes into consideration the conditions under which all the necessary interventions are being carried out for the unobstructed operation of the unit (harsh climatic conditions, unfavourable working environment etc.). No doubt, the mechanisation of the more important phases of the productive procedure would bring about an improvement concerning the above problem and also diminution of the required human labour and freeing of man-power, so that the coexistence of cattle-breeding field and agriculture (where this is possible) might be finally achieved. Moreover, it could ease off the serious unfavourable situations that are presented at the mountainous zone, especially on the managing of large flocks, in pure sheep and goat units. This mechanisation concerns, in a great extent, the mechanic milking, providing the possibility of a simultaneous agricultural occupation and of an increase in the size of the flocks, aiming always at the improvement of the producers' family income, as well as the development of the mountainous disadvantaged and even marginal areas.

There is, also, one more constraint to the development of the extensive livestock production systems related to the great extent that the producer family is engaged with the watching and caring of the flocks or the herds. Related measurements in pure goat flocks and pure sheep flocks as well as in extensive cattle herds in the mountainous zone, showed that the engagement in cattle breeding exceeds 40% of the annual total employment. If it is taken into consideration that the milking by hand in extensive breeding goat and sheep systems, also demands 40% of the total employment (that is in these cases only 20% is sufficient for the total of the activities, except for the watching and milking), then the need for fenced pastures and also the possibility of mechanised sheep milking is obviously imperative (therefore the electricity supply in the area where the flocks are kept is also imperative). The diminution of employment time through the hedging of the flocks and the separation of the zones (see previous), as well as through the mechanical milking will free labour and will increase the flocks' size where the natural resources are sufficient, and it will also create better living conditions for the producers and their families in the mountainous zone.

Management related factors

The producers seem to have certain inability in the managing of the flocks, which are manifested by the low productivity of the most of the extensive systems of animal production units. Concerning the management level, it is pointed out that this is in general low and it is even lower in the case of larger flocks (or herds). The obvious difficulties, in this case, are related to the low level of education and training of the breeders. This acknowledgement demands the upgrading of the training level of the breeders, especially with regard to the easier management of large units, which might present a strong negotiating power during the distribution of their products, as well as a reduction on production cost as a consequence for the improvement of the productivity of the animal capital.

It is a fact that the managing ability of the breeders, is that which succeeds in exploiting the unique biological characteristics of the goat or the sheep and achieves a high productivity within the existent or improved conditions of breeding. The processing of simple, natural animal feed of the massifs to stock-farming products of high biological value (milk, meat, cheese-dairy products) through extensive systems, is a project that requires not only experience, which is paid dearly with financial sacrifices (such as losses of the animal capital), but mainly knowledge of animal husbandry and financial management, which should be based on the high administrative spirit of the producer.

The low educational status of the producers has as a result the lack of co-operative spirit in the area of the mountainous extensive systems (regardless of the aid given by the European Union to the groups of producers) along with all the adverse consequences in their full development, especially as far as the processing and trading of the products is concerned, as well as the providing of good quality and low cost productive means (particularly animal feed during the winter months).

Grazing resources related factors

It is taken for granted that in general the performance of semi-mountainous and mountainous pastures in the Southern Europe's massifs is low due to partially the climatic conditions, but mainly to the lack of a certain rationalistic system of browsing, as well as to their usual overutilisation. Furthermore, there is not a clear and permanent separation of the pastures from the forest areas, often resulting to a confrontation between the breeders and the state. Moreover, there are private areas that have been abandoned (laid off land or permanent fallow fields) because their proprietors have been urbanised years ago, which come in between the natural, community pastures disrupting the necessary unity of a big natural pasture. Therefore, there is not a legislated, clear division among agricultural, breeding and forest areas.

The above speculation together with the dive need of self-production of the animal feed by the breeders and of the protection and better utilisation of the pastures, have always been part of the specialists' concerns with the extensive systems of animal production from the World War II until today, resulting to a kind of «unwritten law» for the extensive livestock systems of ruminants (especially small ones).

This concern, along with recent research results (Apostolopoulos, Gidarakou, 1990, 1991, Kitsopanidis, 1988) indicate that assuring satisfactory pasturage and low costing supplementary feed, are in the centre of interest in order to preserve the extensive systems of animal production and the assurance of a satisfying family income from these, even under conditions of an unstable and problematic market for their products.

Relations of livestock with forest and the environment

In combination with the above, it would be an omission not to refer in particular to the relations among goat breeding and forests given that there is a large number of people who believe that these relations are especially troublesome as they consider that the breeding of goats constitutes a kind of «exterminator» for the forest. This view, which is based on the non-rationalistic use of the semi-mountainous and mountainous pastures by the goat flocks, is dissolved by the long history of the goat in the Southern Europe's massifs and the coexistence of goat breeding with the forest for millenniums, as well as by the size and the distribution of the extensive goat flocks in the semi-mountainous and mountainous zone, that can not be considered as destructive for the forest area (Apostolopoulos et al, 1985, Apostolopoulos, 1988). The overburdening of the pastures and then their overgrazing by goat flocks, might cause serious damages to the forest. But this is an extreme situation, which might not exist anyhow. The rationalistic handling of the semi-mountainous and mountainous pastures depends on the various local agents but also on the breeders themselves in order to have an important economic benefit from the production of goat milk and meat, as well as from other traditional cheese-dairy products, with the goat milk as their basic ingredient, without the damaging consequences on the natural environment. Thus, goat breeding can not accept the forest as a restrictive factor in its development, since as a traditionally productive sector in its extensive form, historically as much as macroeconomically, it has been fully justified. Its ignorant of the truth accusers should now be in a position to understand the real damaging factors to the forest.

Infrastructure related factors

The lack of basic infrastructure projects in mountainous-disadvantaged areas of the massifs seriously obstructs the development of the extensive systems of ruminants' breeding in these areas (access paths, shelters, spring exploitation and assurance of potable water through watering-troughs during the hot months, fencing, fertilisation and re-grassing of natural pastures etc.)

The insufficiency of infrastructure projects in the developing regions of these systems restrains to a great extent the seasonable providing of the necessary inputs and especially of the animal feed of the supplementary nutrition during the winter months. It is also obstructing the utilisation of the outputs and the immersion of the modern technology, for the processing of the primary products in the production areas and the preparation of traditional cheese-dairy products, yoghurt and other dairy products of high quality, which have as their main ingredient sheep and goat milk.

At this point it should be stressed out the application of the Community programs for infrastructure projects and for the amelioration of the milk's quality and the dairy products. Accordingly, the same happens today with animals' slaughter and meat's standardisation at the production areas, with new Community regulations for the quality and with the implementation of the Community Order No. 866/90. However, the further development of infrastructure projects for the improvement of the productive conditions in the extensive systems but also of the living conditions of breeding families is of absolute necessity.

1. THE DEVELOPMENT PROBLEM OF DISADVANTAGED AREAS

Development policies proposed for disadvantaged areas vary widely, from sectoral policies favouring agriculture to the provision of infrastructure and the support of tourism activities. It is surprising, however, the lack of analysis and the ad hoc character of these suggestions, appealing to conviction rather than to reason. There are several myths perpetuated about the development problem of disadvantaged areas; hence, searching for a theoretical framework and looking for the root-cause of the problem is necessary before a policy prescription.

Myth and Reality

There are several misconceptions that are perpetuated about the development problems of disadvantaged and rural areas in general. Most of them fall under four main groups, named sometimes as development myths.

Many consider depressed demand conditions for agriculture, livestock and other resource based industries as the main cause of economic decline of the rural areas. However, the proponents of such views tend to forget that agriculture or other primary industry related incomes are usually less important than non-farm incomes and that economic growth in rural areas is not necessarily related to growth in agricultural incomes.

Building on this approach, many policy makers and farm organisations emphasise the role of agriculture in rural areas in order to gain support for the protection of agricultural products. But, the net result of such policies is what has already been experienced in Europe with the main beneficiaries of support policies being the larger, more efficient farmers of the plains, leaving farmers in disadvantaged areas worse-off.

Another frequently cited proposition for rural disadvantaged areas is promoting policies that take advantage of the assumed low labour cost of unskilled labour force in such areas. Although incomes and wages in such areas are low, labour cost is not necessarily low for various reasons related to the efficiency and productivity of labour. Labour cost is measured as cost per unit of output rather than as cost per unit of input.

Last, but not least, is the proposition that attracting business activity requires the creation of economic and social infrastructure, and the provision of social services as the only solution to the development problem of the disadvantaged areas. Again, infrastructure and services, should be reminded, is not a free-good to be available on demand. Given serious budget constraints facing most governments, expenditure for the creation of infrastructure should be judiciously considered.

The development problem of disadvantaged areas

Looking for the root-cause of the development problem of disadvantaged areas, one should start by looking where the problem is observed. Although many consider that this is a problem mostly observed in Southern Europe, many areas around the world experience similar economic and social phenomena. Such areas include large parts of Scotland, Ireland, the northern parts of the Scandinavian countries, the Alpine regions of Central Europe, the mountain areas of the United States, not to mention many countries of the developing world.

One may, then consider, what is the development problem of these disadvantaged areas. Some would argue that it is a problem of agriculture. However, as already mentioned above, agricultural policies that increase agricultural protection and support may in fact lead to quite unfavourable results for the population of the disadvantaged areas, since most of the benefits of such support are accruing to large and efficient farms of the plains.

An alternative explanation claims that it is a problem of farm fragmentation that is the main cause of the lower efficiency of production. The persistence of small and fragmented landholdings is widely perceived as the most serious impediment to agricultural development in Southern Europe (Hadjimichalis, 1987). However, by reducing fragmentation in the natural environment of mountainous and hilly areas, not much can be gained in productivity and, perhaps, much can be lost in terms of resource use.

Some consider the underdevelopment of disadvantaged areas a consequence of functional - spatial interactions (see O'Cinneide and Cuddy, 1992, pp. 51-64). Many researchers focus on the spatial character of the development process in the von Thunen tradition, explaining observed differences in incomes between regions or areas. Nevertheless, such explanations lead only to typologies and cannot become operational by providing meaningful public policy recommendations.

Others consider the decline of disadvantaged areas the result of an unequal exchange in the Marxist tradition and "the pull from the urban centre sucking resources from the periphery." This approach explains the underdevelopment of the rural periphery as the result of urban-rural interaction in the well-known process of unequal exchange (see O'Cinneide and Cuddy, 1992, p. 68). Although this approach receives credit among many development economists, this model has many shortcomings in explaining the process of underdevelopment of the periphery as an inevitable phenomenon.

Finally, some consider it a problem of what they call "regional political ecology". This approach, put forward by Blaikie (1985), sees the problem of rural and disadvantaged areas as one where the interaction of farmers with their natural environment is seen in a political, economic, and historical context (see also Black, 1992, p. 37). This approach argues for the incorporation of environmental considerations into the theories and policies of regional growth and decline.

A tripartite ecosystem of disadvantaged areas

The ecosystem of a disadvantaged area can be considered as consisting of three parts: population - resources - economic activity (including livestock). Each part contributes to and yields from the system. The resources are renewable, hence the system to survive should be sustainable. The changes in the system are of economic and demographic nature, thus the system has an economic and a demographic behaviour. The system is in equilibrium when demand for incomes does not exceed the yield capacity of the resources and it should be sustainable (see Mergos, 1994, for a detailed presentation of the model).

The sustainability concept of an ecosystem is explained by Conway (1987). The system is sustainable when it can withstand stress and recover to achieve a sustainable yield level. The system that is not sustainable cannot withstand stress and moves to a lower level equilibrium, leading to economic decline and depopulation (see Mergos, 1994, Mergos, 1991).

The nature of stress that a rural ecosystem experiences originates in an increase of the population or a higher demand for yield that is not sustainable by the existing resource stock. The most common factors causing disequilibrium in rural systems is the growth of demand for food and energy in developing countries and for higher incomes in developed countries.

Population growth in the rural and disadvantaged areas of developed countries is very small, perhaps lower than the replacement level, but there is a strong demand for high incomes that puts the system under stress. The population in these areas has the desire and ambition to achieve a higher level of living, in parity with incomes in urban areas. But for this purpose, the higher level of income required cannot be supported by the resource base of the area. The inability of the system to provide higher income levels, because of its extensive character that has developed over long periods of time, leads to disequilibrium, further inducing migration, depopulation and finally reduction in the active or usable resource stock and the productive capacity of the system.

The sustainability of the system may be secured and its decline may be arrested by making the system to withstand stress. In order to increase the capacity of the system to support increased population levels or increased demand for higher incomes and resource yields without reducing the resource stock, it is necessary to increase the productivity and efficiency of the resource use. Hence, the strategic objective should be to increase the productivity and efficiency, mainly labour productivity, of the ecosystem so that additional demand does not reduce the resource stock and does not lead to depopulation.

1. POLICY OPTIONS

Increasing productivity, mainly labour productivity, and efficiency of the ecosystem of disadvantaged areas should be at the core of every development effort in such areas. Without increasing productivity, the system cannot be sustainable and any development effort becomes futile.

The strategic approach should be translated into particular policy priorities (or intermediate objectives) that lead to the overall objective of increased productivity and efficiency. Such priorities can be:

• improving the technology of the system by promoting techniques of production that save resources and labour, by introducing additional activities by making better utilisation of resources, by attracting more trained population;
• reducing distance costs by improving transportation and communication links, attracting new, non-traditional activities;
• introducing new institutional arrangements by encouraging endogenous development, local and collective initiatives leading to better utilisation of resources, mainly common property resources, introducing innovative financing, and increasing participation and involvement of the local population.
  

Policy options for livestock production

Livestock production systems in disadvantaged areas are mostly of extensive type. The main economic constraints have been identified in an earlier section. The strategic objective is to increase productivity and efficiency of the system in order to contribute to the sustainability of the ecosystem and its capacity to provide higher yields and income, and to support a larger population. Increasing efficiency and productivity of the system with focus on livestock production, can be achieved by improving the technology of production, by reducing distance costs, and by introducing new institutional arrangements.

Improving the technology of production that leads to higher productivity and efficiency can be achieved by several alternative measures; by reducing labour requirements (introduction of mechanical technology, reducing herding requirements, perhaps with fencing, etc.) cost of production is reduced and, also, higher incomes for those employed in livestock production are achieved; by reducing the incidence of diseases, and at the same time improving feeding and management practices higher rates of productivity and efficiency are attained.

Better utilisation of grazing resources can be achieved by moderating the conflict between forest and agriculture. Fencing, or enforcement of property rights, for clear distinction between forest, grazing, and agricultural land can lead to a larger, uninterrupted and better utilised grazing resource.

Reducing distance costs is the second major objective for increasing the productivity and efficiency of livestock production. Distance is not measured in kilometres but in costs per unit of product transported to or from the areas. By improving transportation and communication infrastructure, costs are reduced and efficiency is increased. In addition, improvement of transportation and communication infrastructure helps to the creation of alternative marketing channels for products or inputs, enforcing competition and improving local incomes.

The creation of low cost rural infrastructure, such as rural roads and shelters, improves the accessibility of remote areas, effectively increasing the utilisable feed resources, in particular in difficult to reach areas.

Supporting the introduction of new institutional arrangements is the third type of measures to increase productivity and efficiency of the ecosystem and in particular of livestock production. This is of particular importance for the management of common property resources, since most of the feed resources are communal or common property, managed collectively by the local society. Encouraging endogenous development or other local initiatives may be an effective way for better utilisation of government financed development schemes, for project selection and evaluation, and for forward area planning. For example, the creation of producers groups for rational management of common property resources, exchange of knowledge, self-help, training, etc., can improve the technology of the system and lead to higher levels of efficiency.

Finally, supporting innovative financing, such as micro-banking or revolving funds linked to collective action and local initiatives, provides opportunities for expansion and development by relaxing the financial constraint. Institutional measures have limited demand for capital (at least compared with alternative measures that aim to improve infrastructure), are short term in nature and when they succeed they have very high rates of return. However, they are difficult to implement and require a high level of awareness and a community spirit that is not usually present in the societies of Southern Europe.

5. CONCLUSIONS

Disadvantaged areas of Southern Europe face serious economic decline, strong depopulation trends and deterioration of their social fabric. Livestock production is one of the main economic activities of such areas and livestock development is considered an option for broader development effort and sustainability in such areas. Disadvantaged areas are characterised by poor quality of resources, at least compared to other rural areas, remoteness and distance from main population centres, and are usually in hilly and mountainous areas.

Livestock production in disadvantaged areas, is usually of extensive type, and along with forestry and agriculture are the main sources of economic activity and employment for the population. Extensive livestock production systems face several development constraints limiting their capacity to provide higher levels of income and employment to the population. There are five types of such economic constraints comprising limiting factors related to: (i) labour and employment; (ii) management; (iii) grazing resources; (iv) relations with forests and the environment; (v) available infrastructure. Therefore, the nexus between livestock development and economic well-being of the population in the disadvantaged areas needs to be understood in order to derive strategic and policy recommendations.

The role of livestock production in the economy of the disadvantaged areas is then examined with the conceptualisation of the development problem of the disadvantaged areas and with the development of a model, in the form of a tripartite ecosystem of the disadvantaged areas. The advantage of this conceptual approach is that it provides an understanding of the interactions between livestock development, the overall economy, and resource availability of the disadvantaged areas. After identifying labour productivity and efficiency as a major strategic objective in raising incomes and sustaining employment in disadvantaged areas, various alternative strategic and policy options are considered.

Increasing productivity and efficiency of the ecosystem of disadvantaged areas should be at the core of every development effort in such areas. Without increasing productivity, the system cannot be sustainable and any development effort becomes futile. The strategic approach should be translated into particular policy priorities (or intermediate objectives) that lead to the overall objective of increased productivity and efficiency. Such priorities are: improving the production technology of the system, reducing distance costs, and introducing new institutional arrangements by encouraging endogenous development actions. The most important directions of change for increasing productivity of livestock systems are reducing labour requirements of livestock production, increasing yields, improving management of feed resources, improving product marketing and input supply channels, and strengthening endogenous -local initiatives for the management of common property resources.

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