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Policy-oriented research inputs and outputs in SDP

By Catherine Hernandez,2014-03-22 09:16
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To assess behavioural change among SSMVs, a survey was conducted of 61 milk traders along the purposefully selected Central and Western milk market chain

    PAAP’s Electronic Newsletter

28 August 2009 Volume 12 Number 17

    New Appointment at ASARECA

    Mr. James Okiria-Ateker has been appointed Programme Assistant Natural Resources Management and Forestry Programme. He has an MSc in Agriculture (Agro Forestry) from Makerere University Kampala, Uganda. He previously worked as a Project Manager, Strengthening Local Governance in Natural Resources Management (SLOGIN) project, with CARE International in Uganda based in Kasese; Senior Wetlands Management Officer, Wetlands Management Department, Ministry of Water and Environment and Project Manager, Wetlands Sector Strategic Plan-Support Project (WSSP-SP) in the same Ministry; District Environment Officer, Kumi District Local Government; Project Co-Director, Budongo Forest Project, Masindi and; Park Warden, for the then Uganda National Parks now Uganda Wildlife Authority (UWA). His contacts are: j.ateker@asareca.org; Mobile

    0772650905.

Please join PAAP in welcoming James to his new capacity at ASARECA

POLICY-ORIENTED RESEARCH INPUTS AND OUTPUTS IN SMALLHOLDER DAIRY PROJECT

    Linking research with policy action is challenging, and it can be argued that much policy oriented research (POR) does not succeed. Thus a look backwards at just how policy processes were influenced by research efforts is a useful learning exercise for informing future similar efforts, as are efforts to better understand and quantify, where possible, the impacts of such POR efforts. This issue of the newsletter highlights findings of a study on the impact of the revised Kenya dairy policy. The study outlines the policy change process, investigates induced behavioural changes at the levels of field regulators and small-scale milk vendors (SSMVs), and estimates economic impacts on producers, SSMVs and consumers. It also provides a strategic assessment of the research and coordinating roles played by the International Livestock Research Institute (ILRI).

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Introduction

    ROM 1988 to 1994, the International Livestock Research Institute (ILRI) led an integrated research

    extensionfarmer collaboration project that was designed to identify and resolve problems encountered by F

    smallholder dairy farmers in the Coastal region of Kenya. When the Smallholder Dairy Project (SDP) was at the conception phase, research ideas included expanding results and lessons learned such as systems for supplying milk into the highlands and greater Nairobi area. To generate research ideas and concretize objectives for a new dairy project that would be implemented by the Ministry of Livestock and Fisheries Development (MoLFD), Kenya Agricultural Research Institute (KARI) and ILRI, the United Kingdom’s Overseas Development Administration (now

    DFID) sponsored a workshop for dairy industry stakeholders in March 1995. DFID subsequently approved funding for what would become SDP in December 1995. SDP officially commenced in August 1997 as an integrated, collaborative research and development initiative whose purpose was to support the sustainable development of the smallholder dairy sub-sector in Kenya. The research phase proposed to undertake a detailed characterization of the informal milk sector, including an analysis of the policy environment and an examination of factors that hinder the competitiveness of smallholder dairy farmers. Initially, the project focused on participatory development of improved technologies and extension and training materials for farmers and traders, together with a spatial analysis of dairy systems for improved targeting. However, the focus later shifted towards supporting change in the policy and institutional environment in order to better support dairy-dependent livelihoods.

Research, advocacy and policy oriented research (POR) inputs in SDP

During the initial research phase of SDP (19972000), a rapid appraisal of dairy production systems was

    conducted in mid 1998 followed by an economic and structural analysis of dairying which also addressed policy and institutional issues related to dairy development in Kenya. These analyses provided dairy stakeholders with a comprehensive overview of affairs of the Kenyan dairy sector at that time, placing the project in an informed position to contribute to on-going discussions to influence changes in the Kenyan dairy policy. One of the major findings was that the informal milk sector was very important to the livelihoods of milk producers, traders and consumers. Additional research activities in 1998 included structured household surveys in Kiambu District (close to Nairobi) and other districts in Kenya’s Central Province. The general objectives were (1) to describe the existing

    structure of dairy production and farmer practices; (2) assess existing and future constraints and opportunities facing the dairy industry and (3) identify the types of dairy producers who should be targeted by SDP. The last objective was particularly significant for its attempt to identify resource-poor farmers who would be assisted by the project. Furthermore, between 1999 and 2000 SDP assessed public health hazards in the informal milk marketing sector. By the time the research phase was ending in 1999, it was clear that SDP activities so far omitted important aspects such as employment and livelihoods; these were later assessed.

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    The project further developed the characterizations and technologies and also focused on the uptake of those technologies with extended geographical coverage and a new goal of ‘contributing to sustainable improvements in

    the livelihoods of poor people in Kenya’. The findings from these research activities were presented at many

    meetings throughout SDP’s lifetime. Following an in-depth review in 1999, the focus of the project changed to better address other aspects of dairy-related livelihoods, especially the outdated laws banning milk sales by small-scale milk vendors (SSMVs) in urban areas of Kenya.

    The final phase of SDP (200005) focused on policy-level outputs and more active engagement with policymakers. Following a ‘snapshot review’ in 2000 which reported favourably on SDP’s progress but noted that uptake of

    technologies at farm level was difficult in the prevailing policy environment, it was recommended that SDP develop a strategy for the reform of dairy policy using evidence-based SDP research findings in order to increase impact. SDP drew up a strategy for influencing policy, focusing in particular on the findings concerning the informal milk market, its importance for livelihoods and ways in which perceived public health risks could be addressed. The Kenyan dairy policy at that time did not directly prohibit the uptake of any smallholder farm-level technologies. However, it made farm-level production increases and quality improvement less palatable options because the policy prohibited milk sales through the informal sector into urban areas. It was clear that the prevailing policy environment was actively discouraging the predominant section of the market, with major implications for producers, traders and consumers whose livelihoods depended on this informal sector. To tackle some of the identified informal market issues, SDP piloted the training of SSMVs in basic milk testing, hygiene and handling.

    Part of SDP’s policy-influencing strategy was to foster links with civil society organizations (CSOs) that could bring capacity to engage in policy advocacy in a way that the SDP implementing institutions could not. These CSOs became engaged in active advocacy in support of small-scale traders and farmers and, together with the KDB, were partners in SDP’s high-level dairy policy forum held in 2004 to present the project’s research results and

    highlight their policy implications. DFID funded SDP to the tune of approximately USD 2.5 million from 1997 to 2005. Consultations with former SDP personnel revealed that the project’s research and development partners

    contributed an additional USD 2.5 million in staff time, staff resources and other in-kind contributions over the life of the project. Actual staff time in hours was difficult to quantify but SDP had a project manager appointed by MoLFD, ILRI provided the technical research team and the CSOs were very active in the advocacy phase. A steering committee was established with members from ILRI, KARI, Kenya Dairy Board (KDB), Kenya Bureau of Standards (KEBS), MoLFD and the Ministry of Health and some informal market actors.

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POR outputs and SDP research findings

    This study reviewed SDP publications and research presentations between 1997 and 2005 in order to provide a more concrete base to ascertain influence from POR outputs and research findings. The review revealed 10 SDP research reports, 38 conference presentations (including one poster), 9 extension papers (some additionally published in Kiswahili or Kikuyu), 4 journal publications, 10 policy briefs, 1 International Service for National Agricultural Research briefing paper and 1 doctoral and 2 masters theses. The documents covered several topics including farming systems and constraints; consumption, marketing and policy; production and utilization of feed resources; and institutional environment and dissemination of information. Although approximately half of all presentations were made in international forums outside of Kenya mostly by ILRI staff, it was impossible to estimate exactly how much staff time was allocated to this or any other dissemination process.

    Generally, relevant SDP evidence supporting policy and institutional reform as gleaned from the above-mentioned publications and presentations includes the following facts: nearly 800 thousand smallholder households depended on dairying for their livelihoods. At least 86 percent of marketed milk was sold through the informal sector as raw, unpasteurized milk. By extension, the vast majority of farmers and consumers depended on this market. The informal market paid significantly higher prices to farmers and sold milk to consumers at about half the price of processed, packaged milk. SDP also approximated the number of milk hawkers at 30 thousand, the number of dairy cattle at 3 million, total milk production at 3 billion litres and annual per capita milk consumption at 100 litres per annum.

    The above-mentioned statistics were widely used in Kenya and are reflected in official Government and Food and Agriculture Organization of the United Nations (FAO) statistics. However, in 2005 SDP recalculated these statistics using best available evidence. The new estimates put the number of smallholder dairy farms at 1.8 million, the number of milk hawkers at 39,650, the number of dairy cattle at 6.7 million, total annual milk production at 4 billion litres and annual per-capita milk consumption at 145 litres. In addition, SDP investigated the employment creation potential of the informal milk sector. SDP determined that the informal sector accounted for a large proportion of jobs in dairy marketing and processing and that in the larger economy, smallholder dairy farming also supported over 350 thousand full-time wage positions including employment in milk collection, transportation, processing, and sales. These findings on employment creation attracted the interest of government agencies and people involved in designing Kenya’s poverty reduction strategy paper (PRSP), some of whom, as a result, would later become strong advocates for the legalization of SSMVs.

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    Overall, the findings on the highly significant farmer and consumer dependence on informal milk marketing and the employment generation potential, among others, proved crucial in influencing behavioural and policy change in the Kenyan dairy sector. Kenyan consumers boil milk before they drink itwhether they purchase it raw or

    pasteurizedthereby significantly reducing public health concerns. SDP research results showed that processed milk from large-scale processors showed no significant difference in quality compared with milk from unlicensed tradersboth were failing to meet quality standards that were set by KEBS. SDP research determined that training of small-scale traders in testing and handling of milk and use of appropriate containers led to improvements in milk quality.

Policy influence pathway in SDP and the evolution of Kenya dairy policy environment

    To understand the policy environment in which SSMVs operate, it is necessary to first chronicle the evolution of the dairy industry in Kenya due to successive government interventions. To assess policy influence, this section draws heavily from findings from a recent ILRIOverseas Development Institute (ODI) study grey literature and

    unpublished SDP documents, complemented by interviews with field regulators, policymakers and researchers. These approaches captured details not only of changes in written policies but also how technical information from SDP research was used to influence policymaking. It recounts events, activities, timelines and people present at each stage.

Review of the pre-policy change regulatory environment

    The policy of regulating the Kenyan dairy sector dates as far back as 1925 when Kenya Cooperative Creameries (KCC) was incorporated and charged with dairy processing and marketing responsibilities. Initially KCC operated in an environment that included other big processors. However, in 1968 its status as sole processor and distributor or marketer of milk was confirmed when the government withdrew operating licenses from other processors, supposedly wanting to rationalize milk distribution. The business of regulating milk marketing fell to KDB which came into existence as decreed by the 1958 Dairy Industry Act. Although the Act was revised in 1984, it largely remains the main regulation that guides milk marketing activities in Kenya. The functions of KDB as spelt out in the Act are (1) to organize, regulate and develop the efficient production, marketing, distribution and supply of dairy produce, having regard to the various types of dairy produce required by different classes of consumers; (2) to improve the quality of dairy produce; (3) to secure reasonable and stable prices to producers of dairy produce; (4) to promote market research in relation to dairy produce; (5) to permit the greatest possible degree of private enterprise in the production, processing and sale of dairy produce, consistent with the efficiency of the producer and the interests of other producers and consumers and (6) generally to ensure, either by itself or in association with any government department or local authority, the adoption of measures and practices designed to promote greater efficiency in the dairy industry.

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    The 1958 Act granted monopoly powers to KCC in purchasing, processing and marketing in scheduled areas, mainly urban markets which were the preserve of large-scale settler operations. From its establishment to the early 1970s, milk supplies to KCC by large producers alone were managed through contracts, quotas and minimum volumes. However, the 1964 Kibaki Commission recommended that contracted milk quotas be abolished and that KCC should accept milk from all producers, including SSMVs, as long as the quality was acceptable. As a result, KCC made guaranteed purchases of all milk supplied by all producers, irrespective of market demand. To accommodate these purchases, KCC needed to expand and did so extensively in the 1970s and 1980s. Increased government expenditure on subsidized input services led to increased milk production and by 1977, smallholder milk production had overtaken large-scale production. KCC maintained its dominance in marketing and continued to experience rapid growth. By 1987, inefficient management led to untenable economic losses, paving the way for a government move to administer KCC under the Cooperatives Act and replace its board with a government-appointed one.

    In 1992, the dairy sector was liberalized with policy options that included price decontrols, liberalization of marketing, government budget rationalization, privatization and parastatal reform. That became justification for the government to restructure KCC to make it a profitable enterprise. Despite liberalization and restructuring, political interventions, inefficient management and political rent-seeking behaviour heralded the collapse of KCC as a state monopoly (monopsonist) in the 1990s. Liberalization ended the government monopoly status of KCC and encouraged private sector participation through other large-scale processors. However, the official policy excluded participation by SSMVs except through sales to large-scale processors including the New KCC, a policy that was in prior existence. When SSMVs sold milk to consumers, especially in scheduled areas, it was considered illegal. By the time of liberalization, KCC operated 11 collection centres and 11 processing facilities, employed 4000 people, handled 420 million litres of milk and produced 17 dairy products. However, the collapse of KCC in the lucrative, high-demand urban centres created a gap that was quickly filled by several large-scale, licensed and regulated private sector milk processors and packers and, in some cases, by small-scale unlicensed informal milk traders. Before 1992, KCC as the government-supported monopoly on urban milk sales had pasteurized milk sales amounting to slightly over 200 million litres. At the time of the most recent SDP appraisal), it was estimated that the formal sector accounted for about 14 percent of milk sales, representing 196 million litres. Besides the New KCC, other large-scale processors in the formal milk sector in Kenya include Brookside Dairies, Spin Knit Dairies, Githunguri Dairy and Adarsh Developers.

Policy influence in the Kenyan dairy policy change process

    As KCC gradually collapsed in a liberalized environment and its market share was taken over by other large licensed processors, a 1993 government document, the Kenya Dairy Development Policy, provided guidance on

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    how to restructure and remain competitive. Yet, this was a policy environment that actively discouraged operations by SSMVs, even though by most accounts the 1958 Dairy Industry Act did not overtly proscribe their activities. There were speculations that the authority to regulate the informal sector derived from the Public Health Act of 1966, which specifically stated that the sale of milk products must be conducted at acceptable premises. Such confusions in applicable policy, the proliferation of SSMVs, the economic benefits of the informal dairy sector and other considerations galvanized the government to act in the policy arena. Consequently, in 1996 the government set up the Dairy Industry Act review task force whose mandate was to propose amendments to the 1958 Act to reflect the liberalized policy environment in the dairy sector. This period coincided with the inception of SDP research activities, although at that time, the activities of the task force were independent of SDP. Among others, task force membership included personnel from KCC, KDB and MoLFD.

    Revision of the 1958 Dairy Industry Act by the review taskforce focused on (1) organization and structure of the new KDB; (2) functions, powers and duties of the new KDB; (3) management and administration of the new KDB; (4) financial aspects of the new KDB; and (5) future steps and transition issues until KDB became fully autonomous and wholly funded through payment of cess fees by milk traders. The revised Dairy Industry Bill was available for stakeholder consultation by June 1996. This bill did not dwell on the role of SSMVs in retail markets. In the meantime, a subcommittee of the same task force was set up to revise the policy document. Although the draft bill was presented to the office of the Attorney General in 1996, critical personnel changes in the ministry delayed the reform process. By 1997, a draft of the revised policy document had also been prepared and was presented to the ministry policy committee in 1998. In 1999, the Ministry of Livestock accepted the revised policy document and in 2000, the revised draft bill. The two documents were harmonized in May 2000 and presented to the KDB and the Parliamentary Committee on Agriculture, Lands and Natural Resources in August/September 2000. In March 2001, following a request by the Parliamentary Committee, stakeholders were given another opportunity to revise the bill and policy document. The revised documents were resubmitted to the Parliamentary Committee later that year. Because 2002 was an election year, the bill and policy documents saw very little activity. In 2003, there was a new government in office and the revised bill and policy documents were resubmitted to the reconstituted Parliamentary Committee.

    By 2003, the policy advocacy phase of the SDP had become very active. The new government made some changes to the KDB, but by then, such vacillations had emboldened large-scale processors who were opposed to the new bill and policy. In addition to safety and quality issues addressed in the research phase, SDP arguments in favour of engaging SSMVs included the huge impact on employment creation and poverty reduction in the era of the PRSP. Paid advertisements were placed in local newspapers touting the benefits of legalization, but these were met with rebuttals in the same media by large-scale processors, culminating, by late 2003, in what became known as the ‘milk wars’. Arguments in favour of legalization which appeared in local media used research

    evidence from SDP. In May 2004, SDP and partners organized a consultative dairy policy forum of stakeholders

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    including ministers, members of parliament and other government officials, at which it was agreed in principle that the policy of engagement with SSMVs would be supported. Presentations at the forum included research findings that supported pro-poor policy reforms. In addition, SDP and partners officially launched policy briefs and screened a video entitled ‘Unheard voices from Kenya’s dairy industry’. While the bill and policy change processes

    continued in parliament, ministerial authority allowed the Minister for Livestock and Fisheries Development, on the advice of the KDB, to issue a set of dairy industry regulations (Legal Notices 101, 102 and 103) in September 2004. While they were all updated versions of subsections of the revised 1958 Act, the most pertinent one was Legal Notice 102, also known as the Dairy Industry (Sales by Producers) Regulations, 2004. These regulations streamlined the licence application processes and, more importantly, clearly enumerated the types of licences that were now available in the dairy sector (e.g. primary producer, processor, mini dairy, cottage industry, milk bar and cooling plant), some of which were clearly focused on activities that were compatible with small-scale informal operations. KDB officials used the impetus provided by the issuance of these regulations to engage and institute training, certification and licensing requirements for SSMVs.

    Since the policy change, KDB has worked to train and certify SSMVs while licensing their milk outlets and premises which meet requirements on handling, hygiene and quality control. In addition, KDB has trained and employed the services of business development service (BDS) providers to train and certify SSMVs whose businesses would then be licensed by KDB. While progress is being made on these fronts, the number of BDS providers is still small relative to the number of SSMVs waiting to be trained, certified and licensed. Also, KDB is working with NGOs like SITE Enterprise Promotion to encourage milk consumption on the premise that quality is being greatly improved by training and licensing. KDB has started branding milk outlets and premises to improve consumer confidence and promote recognition by regulatory authorities. Evidence, though yet anecdotal, suggests that milk sales are increasing in these branded outlets and premises.

Impact of new dairy policy on enforcement and compliance

    Primary information to assess the impact of the new dairy policy on enforcement and compliance and changes in general attitudes and behaviour of both regulators and SSMVs was obtained from interviews with field regulators and SSMVs. In cases where the survey respondents were asked to provide information on the periods before and after the policy changes, the actual comparison referred to the days or weeks prior to September 2004 vs. July/August 2007. Additional insights were gleaned from interviews with policymakers and researchers. The information from the interviews was supplemented with information from grey literature and the ILRIODI study by

    Leksmono et al. (2006).

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Behavioural change among field regulators

    Around late 2004, field regulators instituted some changes in enforcement activities, following specific instructions from KDB and Public Health Department officials. Previous activities were limited to policing and inspection, usually checking for licences that were never issued. Nowadays, their task is to ensure that licensed outlets and premises operated by SSMVs meet conditions on milk hygiene and testing requirements, sanitation of premises and health status of SSMVs. They also provide advice on how to meet these conditions. In addition, some regulators issue milk movement permits to mobile traders and assist the licensing process by enabling relevant paperwork required from SSMVs; these activities are accomplished through field visits, spot checks and training. The skills required to bring about these changes have mostly been obtained through formal training over the last few years. Some of the regulators have not strictly followed the new requirements or instructions. Reasons proffered include a need to adapt to local situations, but also that some of the requirements may be too expensive for some SSMVs. It is no surprise, therefore, that they believe that most trained and licensed traders do not strictly adhere to the requirements of the new regulations. Infractions include the continued use of plastic containers instead of aluminium ones, the use of unhygienic premises, excessive adulteration and illegal handling during transportation and distribution. While some regulators have routinely helped SSMVs to gradually comply with the requirements of the new regulation, others have meted punishments such as confiscating illegal containers and products, charging SSMVs to court and, in the most extreme cases, revoking licences.

    Before the new policy, violations by untrained and unlicensed SSMVs were mostly punished by arrests and subsequent court appearances; now, unlicensed and untrained SSMVs may be offered advice on how to get training and licensing. Sometimes, the shortage of regulatory staff means that the unlicensed and untrained SSMVs may actually be left to operate. Regulators do not accept that illegal payments such as political rents were rife before or after the policy change, but they suggest that legalization of the activities of SSMVs has made such payments even less likely. KDB officials maintain that harassment was never a part of the regulatory policy and that these actions were perpetrated by over-zealous field agents who had little or no technical supervision. The new technical personnel at KDB are aware of the employment creation opportunities in the informal dairy sector and claim to be working to enable rather than stifle the sector.

Behavioural change among SSMVs

    To assess behavioural change among SSMVs, a survey was conducted of 61 milk traders along the purposefully selected Central and Western milk market chain areas. The areas of Nairobi (including Nairobi, Thika and Kiambu) and Nakuru were selected because they represent scheduled trading areas with KDB offices and would therefore be directly influenced by the regulations.

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Survey results

    All the interviewed milk traders owned their operations, although there were milk bar operations established by groups of SSMVs. Most (82 percent) of the businesses were started in 2004 or earlier, that is, before the policy change, so most interviewed traders were familiar with the policy enforcement environment before and after the policy change. Almost 50 percent of SSMVs interviewed were producer-traders, implying that their milk was sourced from their farms. The remainder were almost evenly divided among traders who were non-producers, transporter-traders and milk bar operators, with almost all their milk coming from other milk traders.

    Almost all respondents were familiar with the new regulations or requirements on milk handling and quality control, and they used these guidelines or regulations in the conduct of their businesses. The specific regulatory requirements mentioned include training and licensing, types of containers used and hygiene. Many SSMVs received information on milk handling and quality control from KDB and, to a lesser extent, from ILRI and other SSMVs, mostly between 2005 and 2007. This was the period when KDB actively encouraged SSMVs to obtain training and to familiarize themselves with issues related to milk handling and quality control. It is noteworthy that the surveys were conducted in areas where KDB operates. In the survey, approximately 85 percent of respondents reported that they had been trained on milk handling and quality control methods. However, only half of them reported applying and receiving operating licences immediately following training, implying a lag between training and licensing. The hiatus is not unusual, given that training and certification of SSMVs by BDS and KDB usually precede licensing of premises and outlets for milk sales. In reality, all but two SSMVs who were interviewed had one form of licence or another for their operations. The most common licences reported were milk bar licences (49 percent), milk movement permits (44 percent) and mini-dairy licences (15 percent).

    The survey established that approximately 23 percent of all respondents had more than one operating licence. For example, a typical SSMV obtained milk movement permits which allowed milk to be transported to a licensed milk bar that is co-owned with other SSMVs. The latter issue also explains the apparently disproportionately high number of SSMVs reporting milk bar licences. Consistent with the policy change timeline, most SSMVs were trained by KDB agents between 2005 and 2007. Nearly 90 percent of respondents reported that it was presently easier to obtain a license than in the period prior to 2004 when the new policy came into effect, noting that licensing is now being expedited following training and other requirements. On average, SSMVs reported that before they were trained and licensed, they were harassed by KDB and other regulators about four times a month; the average frequency of harassment was significantly higher in Nakuru (six times a month) than in Nairobi. Forty percent of respondents reported that they were last harassed by KDB or other regulators in 2005 or later. The most common form of harassment was by confiscation of milk, but nearly 10 percent of SSMVs reported bribing their way out of a potential arrest situation. Nearly all licensed SSMVs who had been in operation before the policy

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