MALVUWASI: Exhibit 1 WASU\tCONSUMPTION (THOUSANDS\tOF\tTONNES): 1998\t- 2013 400 350 300 250 200 150 100 50 0 1 MALVUWASI: Exhibit 2 PERCENT OF\tWASU\tCONSUMPTION BY\tSOURCE\tOF\tPRODUCTION 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 MALVUWASI\tTOTAL WASU\tCONSUMPTION (000S\tOF\tTONNES) 198 208 217 206 198 208 223 240 264 283 304 308 301 317 344 368 MALVUWASI SMALLHOLDER PRODUCTION(000S\tOF TONNES) 175 180 185 192 195 185 182 183 185 189 193 202 210 192 189 189 MALVUWASI SMALLHOLDER PRODUCTION (PERCENT\tOF CONSUMPTION) 88 87 85 93 98 89 82 76 70 67 63 66 70 61 55 51 IMPORTED\tLIVE\tWASU (PERCENT\tOF CONSUMPTION) 7 6 7 6 1 8 11 9 12 11 12 11 3 10 12 14 IMPORTED\tPROCESSED WASU\t(PERCENT\tOF CONSUMPTION) 5 7 8 1 1 3 7 15 18 22 25 23 27 29 34 35 CASE\tSTUDY:\tCAREY\tBUSINESS\tSCHOOL MALVUWASI\tSMALLHOLDER\tWASU\tFARMING You\tare\tmembers\tof\ta\tmulti-disciplinary\tproblem-solving\tteam\tcomposed\tof academics\tand\tpractitioners\tfrom\ta\twide\trange\tof\tdisciplines\t-\te.g.\tforage\tspecialists, livestock\tand\tfarming\tsystems\tscientists,\tsocial\tscientists\tand\tresource\teconomists. Your\tteam\thas\tbeen\tengaged\tto\tassist\tthe\tgovernment\tof\tMalvuwasi,\tan\tAsian\tisland nation.\tSpecifically,\tyou've\tbeen\thired\tby\tthe\tMalvuwasi\tMinistry\tof\tAgriculture\tto recommend\ta\tprogram\tto\tfacilitate\tthe\tdevelopment\tof\tsmallholder-sourced wasu\tproduction\tsuch\tthat\tMalvuwasi\tcan\tbe\tself-sufficient\tby\t2035\tto\tmeet domestic\tconsumption\tdemand\tfor\twasu. (NOTE:\tMalvuwasi\ttakes\tits\tname\tfrom\tthe\twasu\t(plural,\twasi),\tan\tanimal indigenous\tto\tMalvuwasi\tand\tto\tseveral\tother\tcountries\tin\tthe\tregion.\tIn\tfact,\tin\tthe native\tlanguage\t'malvuwasi'\tmeans\t'land\tof\tthe\twasi'.\tMost\tsmallholder\thouseholds in\tMalvuwasi\tbuild\ttheir\tlivelihoods\taround\twasi\thusbandry.) Your\tteam\thas\thad\tseveral\tdays\tto\tgather\tsome\tinitial\tbackground\tdata\t(i.e.,\tto conduct\ta\tpreliminary\tScoping\tAnalysis,\tas\twe\twill\tdiscuss\tin\tclass\t4).\tDuring\tthose few\tdays,\tyou\thave\ta)\thad\ta\tcouple\tof\tphone\tinterviews\twith\tmid-level\tmanagers\tin the\tMinistry;\tb)\tconducted\tan\tinitial\tliterature\tsearch\ton\tMalvuwasi\titself\t(economic development,\tpolitical\tstructure,\tetc.);\tc)\tlearned\ta\tlittle\tmore\tabout\tthe\tnature\tof smallholdings\tin\tthe\tcountry;\td)\tleveraged\tsome\tother\tcontacts\tto\tgain\tfirst\tinsights into\tthe\tproducer-to-consumer\tsupply\tsystem\tfor\twasu\tmeat. (NOTE:\twith\tthe\tearly\tscoping\tresults\tin\thand,\tone\tof\tyour\tteam's\tfirst\tpriorities\twill be\tto\tconsider\twhether\tthere\tare\tchanges\tto\tthe\tway\tin\twhich\tthe\tMinistry\tof Agriculture\thas\tdefined\tthe\tproblem\tthat\twould\thelp\tto\tfocus\tthe\tproblem\tsolving effort\ton\tachieving\tmore\tproductive\toutcomes) Following\tare\tthe\tkey\tfindings\tfrom\tthe\tinitial\tscoping\tanalysis. BACKGROUND Malvuwasi\tis\ta\tcountry\tin\tAsia,\tmade\tup\tof\tmore\tthan\t25\tislands\tof\tvarying\tsizes.\tAs of\tthe\t2014\tcensus,\tthe\ttotal\tpopulation\tof\tMalvuwasi\twas\tapproximately\t40\tmillion. Of\tthat\ttotal\tnumber,\troughly\t40\tpercent\tis\tlocated\tin\tthree\tmajor\tpopulation centers:\tthe\tcapital\tand\tlargest\tcity\t(located\ton\tthe\tlargest\tisland\tand\tsubstantially the\tmost\tpopulous\tcity),\tand\tmajor\tpopulation\tcenters\ton\teach\tof\ttwo\tseparate islands.\tThe\t60\tpercent\tof\tthe\tpopulation\tthat\tis\tnot\tlocated\tin\tthe\tthree\tmain\tcities is\tcomposed\toverwhelmingly\tof\tagricultural\tsmallholders\t(those\twho\town\tand utilize\tsmall\tplots\tof\tland),\twith\tcrop-livestock\tfarming\thouseholds\tthe preponderant\tform\tof\tagriculture. Since\tMalvuwasi\tbecame\tindependent\tmore\tthan\tforty\tyears\tago,\tit\thas\tdeveloped\ta robust\tdemocratic\tpolitical\tstructure.\tIt\tis\tcomposed\tof\t14\tregions,\twith\teach\tof\tthe three\tmajor\tcities\tcomprising\tone\tregion.\tAt\tthe\tnational\tlevel,\tthere\tare\tfour political\tparties,\twith\tthe\ttwo\tmain\tparties\treflecting\ta\tcenter-left\tand\ta\tcenter-right policy\torientation\trespectively\t(the\tcenter-left\tpart\tcurrently\tforms\tthe government).\tThe\tthird\tand\tfourth\tparties\tare\tsmaller,\tand\tone\tof\tthem\thas\trecently exhibited\ta\tstrong\tnationalist\tflavor\tto\tits\tpolicies.\tAt\tthe\tregional\tlevel,\tthose\tsame four\tparties\tare\tthe\tmajor\tplayers,\tbut\tthere\tare\talso\tother\tregional\tparties,\twhose policies\ttend\tto\treflect\tneeds\tand\tconcerns\tthat\tdiffer\tfrom\tarea\tto\tarea. At\tevery\tlevel\t-\texcept\tthe\tthree\tregions\tconstituting\tthe\tmajor\turban\tcenters\t- power\tis\tmade\tor\tbroken\tby\tthe\tvotes\tof\tthe\tsmallholders.\tAnd\tso,\twhile\tpoliticians seek\tto\tadvance\tpolicies\tthat\treflect\tthe\tneeds\tof\ta\trapidly\temerging\teconomy\tand the\trise\tof\ta\tvibrant\tnew\tmiddle\tclass,\tthey\tare\talso\tacutely\tconscious\tof\ttrying\tto\tlift the\tliving\tstandards\tof\tthe\tsmallholders\tspread\tacross\tthe\tarchipelago.\tThus, governments\twant\tto\timplement\tprogram\telements\tthat\tenhance\tthe\tprospects\tthat agricultural\thouseholds\tcan\tuse\twasu\thusbandry\tas\ta\tmeans\tto\traise\ttheir\tliving standards.\tThe\tgoal\tis\tto\timprove\tsmallholders'\treturns\tfrom\traising\twasi,\twhile\talso meeting\tthe\tgrowing\tdemand\tfor\twasu\tmeat\tin\turban\tsettings. THE\tNATURE\tOF\tSMALLHOLDINGS Most\tsmallholder\thouseholds\twith\twasi\twould\tfall\tinto\tthe\tdefinition\tof\tlivestock 'users'\tand/or\t'keepers',\trather\tthan\t'commercial\tproducers'.\tOn\taverage, smallholders\thave\tonly\t2-4\thead\tof\twasu.\tWasi\thave\ttraditionally\tbeen\tused\tfor draught\tpurposes,\tbut\talso\tserve\tas\ta\tsource\tof\taccumulated\tcapital\tfor\toccasional sale\tinto\tthe\tMalvuwasi\tfood\tmarkets\tto\tfinance\textraordinary\tpurchases\tand/or\tto meet\tcontingencies. Smallholdings\tare\ttypically\tless\tthan\ttwo\thectares\tin\tarea\tand\tsupport\tan\tintegrated mix\tof\tcrop,\tforage,\tlivestock\tand\thuman\tactivities.\tThe\ttwo\tbasic\tland\ttypes\tare 'cropland'\tand\t'upland'.\tCropland,\tlocated\tclose\tto\tthe\tmain\tresidence,\tis\tused\tto grow\ta\trange\tof\tannual\tcrops\tsuch\tas\trice,\tmaize,\tpeanut\tand\tsoybean.\tUsually\tthis land\tis\tnaturally\tflat\tor\tformed\tinto\tterraces,\twith\tdeeper,\tmore\tfertile\tsoils\tand access\tto\tsimple\tirrigation.\tIt\tmay\tbe\ttrenched\tto\tretain\toverland\tflow.\tThe\tlength\tof the\twet\tseason\t(typically\tNovember-May)\tand\taccessibility\tto\tirrigation\tdetermine the\tselection,\textent\tand\tnumber\tof\tcrop\tcycles\tin\tone\tyear. Although\tfarmers\talso\tkeep\tother\tlivestock,\tincluding\tbuffaloes,\tgoats,\tducks, chickens\tand\tgeese,\twasi\tplay\ta\tcentral\tand\tmultifunctional\trole\tin\tthese\tfarming systems.\tDepending\ton\tthe\ttime\tof\tyear,\twasi\teither:\ta)\tfree-graze\tcrop\tstubble, 'native'\tpasture\tor\tforages;\tb)\tare\ttether\tgrazed;\tc)\tare\tpenned\tand\thand-fed\tvarious mixtures\tof\t'cut-and-carry'\tforage.\tForage\tproduction\ttends\tto\tfollow\tthe\tseasonal climate\tpattern;\tmaximum\tbiomass\tproduction\toccurs\tduring\tthe\twet\tseason\tand declines\tto\talmost\tzero\tby\tthe\tend\tof\tthe\tdry\tseason. Uplands,\tlocated\tfarther\taway\tfrom\tthe\thouse,\tare\tlarger\tin\tarea\tand\tusually\tless accessible.\tThis\tland,\twhich\toften\tincludes\tsloping\tground\twith\tshallow\tand\tless fertile\tsoils\tand\twith\tno\taccess\tto\tirrigation,\tis\tused\tto\tgrow\tperennial\tfruit\t(e.g. mango,\tcashew),\tfiber\t(e.g.\tkapok)\tand\ttimber\tcrops\t(e.g.\tbamboo). Much\tof\tthe\tupland\tis\tmanaged\tas\ta\tcooperative\tland\tholding\twith\tother\tresidents\tof a\tdistrict.\tA\tdistrict\ttypically\tcovers\ta\tcatchment\tarea\tof\t5-10\tvillages\tand\tis nominally\tgoverned\tby\ta\tdistrict\tchief.\tThe\tdistrict\tchief\thas\thistorically\tbeen\ta hereditary\tposition\tand\tin\tmany\tdistricts,\tit\tremains\tso.\tIn\tthose\tsettings,\tthe\tchief usually\thas\tunilateral\tauthority\tto\tdecide\twhen\tand\thow\tthe\tcommunal\tuplands\twill be\tused. However,\tdistrict\tgovernance\thas\tbeen\tshifting\trapidly\tin\trecent\tyears,\tand\tit\tis estimated\tthat\ttoday,\tin\tmore\tthan\t50\tpercent\tof\tthe\tdistricts\tcountry-wide,\tthe district\tchief\thas\tbeen\telected\tthrough\tone\tform\tof\tparticipatory\tdecision-making\tor another.\tAnecdotal\tevidence\tsuggests\tthat\tin\tsuch\tdistricts\tgovernance\tand\tdecision making\tin\tsuch\tdistricts\tis\tfaster\tand\tmore\tresponsive\tto\tthe\twill\tof\tthe\tsmallholders in\tthe\tdistrict. All\thousehold\tmembers\tcontribute\tto\tthe\tmanagement\tand\toperation\tof\tfarm,\tnonfarm\tand\thousehold\tactivities.\tKey\tfarm\tactivities\tinclude\tland\tpreparation\t(e.g. plowing);\tsowing\tand\ttransplanting\tthe\tcrop;\tfertilizing;\tchemical\tapplication; weeding;\tharvesting,\tthreshing,\tbagging\tand\ttransportation\tof\tthe\tharvested product;\twasi\ttending;\tforage\tgathering;\tand\twater\tgathering.\tFarmers\toften\thire additional\tlabor\tto\tassist\twith\tharvesting\tand\tland\tpreparation\tactivities.\tThe farmers\tthemselves\tmay\talso\tseek\tsupplementary\tincome\tfrom\toff-farm\tactivities both\tagricultural\t(e.g.\tweeding)\tand\tnon-agricultural\t(e.g.\tcrafts). MALVUWASI\tECONOMY\tAND\tDEMAND\tFOR\tWASU GDP\tgrowth\tin\tMalvuwasi\thas\tbeen\tstrong\tover\tthe\tpast\t20\tyears,\taveraging\t5.1% year-on-year\tgrowth\tover\tthat\tperiod.\tAs\twith\tmost\temerging\tmarkets,\tMalvuwasi's growth\thas\talso\tbeen\tsomewhat\tvolatile\t-\tit\tdipped\tinto\tnegative\tterritory\tin\tboth 2001/2002\tand\t2009/2010\t-\tbut\tit\trecovered\tquickly\teach\ttime. As\tthe\teconomy\thas\tgrown,\tso\thas\tthe\temerging\tmiddle\tclass,\tin\ta\tpattern\tvery common\tamong\tdeveloping\teconomies\tover\tthis\tperiod.\tAnd,\tas\tthe\tsize\tand\twealth of\tthe\tmiddle\tclass\thas\tincreased,\tso\thas\tdemand\tfor\twasu\tas\ta\tmajor\tportion\tof\tthe household\tdiet.\tExhibit\t1\tin\tthe\tadditional\tslides\tprovided\tshows\tthe\testimated\tlevel of\twasu\tconsumption\t(tonnes)\tover\tthe\tperiod.\tOn\tthe\tother\thand,\tthe\tnature\tand pattern\tof\tconsumption\tat\tthe\thousehold\tlevel\tis\tmuch\tas\tit\thas\talways\tbeen:\tno Western-style\tportions,\tno\tstrong\tquality\tdifferentiation\t(usually\tused\tin\tprepared dishes),\tfresh,\tlow\tfat,\ttender. However,\twell\tmore\tthan\t80%\tof\tthe\ttotal\tincrease\tin\tannual\tdemand\tfor\twasu\tin Malvuwasi\tover\tthe\tpast\t15\tyears\thas\tbeen\tmet\tby\timports,\trather\tthan\tby\tdomestic production\t(Exhibit\t2).\tThat\ttrend\tis\tincreasing.\tIn\tfact,\tannual\tdomestic\tproduction has\tincreased\tby\tonly\t10-12\tpercent\tover\tthe\tpast\t20\tyears\tand\tthere\thave\tbeen major\tdeclines\tin\tproduction\ton\tseveral\toccasions. Not\tsurprisingly,\ta\tsubstantial\tmajority\tof\twasu\tmeat\tconsumption\ttakes\tplace\tin\tthe major\turban\tcenters\t(estimated\t80\tpercent\tof\ttotal\tannual\tconsumption).\tIt\tis estimated\tthat,\tin\tthose\turban\tsettings,\tmore\tthan\t70%\tof\twasu\tmeat\tis\tsold\tthrough supermarkets\t(cut,\tpackaged\tand\toffered\tin\trefrigerated\tunits),\twhile\tless\tthan\t30% is\tsold\tin\tstreet\tmarkets\t(larger\tcuts,\tbought\tfresh).\tThe\tstreet\tshare\tof\tretail\tsales has\tgradually\tdiminished\tover\ttime\tand\twill\talmost\tcertainly\tcontinue\tto\tdo\tso\tas the\torganized\tretail\tsector\tcontinues\tto\tconsolidate\tand\texpand\tto\tmeet\tthe demands\tof\ta\tgrowing\tand\tmore\tsophisticated\tmiddle\tincome\tdemographic\tgroup. In\tfact,\tbecause\tthe\tdemand\tfor\twasu\tis\tgrowing\tso\tsubstantially\tand\tbecause\tthe overall\tcompetition\tamong\tretailers\thas\tintensified\twith\tthe\tarrival\tand consolidation\tof\tmodern\tplayers,\tthose\tretailers\thave\toften\tused\twasu\tcuts\tas\ta marketing\ttool,\tpricing\taggressively\tto\tposition\tthemselves\tas\tvalue\tleaders. Wasu\tfrom\tthe\trural\tareas\tof\tMalvuwasi\tcurrently\treaches\tthe\turban\tcenters through\ta\tcomplex\tand\tmulti-stage\tdistribution\tsystem: Farmers\tsell\tto\ttraders\tat\tlivestock\tmarkets\tat\tthe\tdistrict\tlevel Traders\thold\twasi\tfor\tseveral\tdays\tat\tfeedlots,\tfeeding\tand\tpreparing\tfor shipping Traders\tship\tto\tquarantine\tstations,\twhere\twasi\tare\tagain\theld\tfor\tseveral days\tfor\ttesting Wasi\tare\tshipped\tto\tmarkets\tadjacent\tto\tmajor\turban\tcenters,\twhere\tthey\tare again\theld\tto\tbe\tprepared\tfor\tauction Retailers\tbuy\tat\tauction\tand\tship\tto\towned\tand/or\tcontracted\tprocessing centers;\tprocessors\tdeliver\tlarger\tsections\tto\tstores\tfor\tfurther\tbreak-down and\tpackaging\tinto\tconsumer\tportions Independent\tprocessors\tpurchase\tdirectly\tfor\tpreparation\tand\tsale\tto\tlocal street\tmarket\tvendors Wasu\timports\tcome\tcurrently\tfrom\tthree\tneighboring\tcountries.\tWhile\tthere\tare tariffs\tin\tplace\ton\tthe\timport\tof\tprocessed\twasu,\tthey\tare\tnot\tonerous\t(average about\t12%\tacross\tall\tforms\tof\timport),\tand\teven\tthey\tmay\tbe\teliminated\tover\ttime\tif an\timpending\ttrade\tpact\tis\tfully\timplemented