More than 2.8 billion people, or close to half the world's population, live on less than the equivalent of $2/day. More than 1.2 billion people, or about 20 per cent of the world population, live on less than the equivalent of $1/day. Poverty is still largely a rural phenomenon. This means that effective poverty reduction measures can only be made if the livelihoods of the rural poor can be improved.

	Combating rural poverty is recognised to be an important component of poverty reduction.
	Smallstock development is a critical component of rural poverty reduction
	Small animals are important both for food security and also for income generation
	Of an estimated 1.1 billion rural poor, about two thirds depend on livestock for part of their livelihoods

For large numbers of small and marginal farmers, livestock are often the only capital reserve of farming households, to be sold when times are hard. Animal draught power and nutrient recycling through manure compensates for unattainable access to tractors and fertilizers. Livestock, in one way or another, are critical to sustaining poor farmers. A number of different factors serve to underline the importance of livestock in general, and smallstock in particular, to the livelihoods of poor farmers:

		Animal sourced food plays an important role in child nutrition
		Protein-Energy Malnutrition (PEM) in childhood has serious, long-term consequences for learning and cognition
		Livestock, especially smallstock, can improve the overall nutritional status of poor families
		Eggs and milk are important sources of highly nutritious food. Milk from sheep and goats is more nutritious than cows milk
		Livestock production can empower vulnerable groups
		Many poorer farmers rely on common land for grazing. These areas are shrinking. As a result, smallstock - especially poultry - will play an increasingly important role
		Integrated livestock and crop production can increase farm productivity (livestock can help to maintain the status of natural capital)
		Traditional livestock systems act as a form of social security, and play a role in establishing and maintaining social networks
		For many poor households, livestock are the primary form of savings. However, production risks are greater for the poorer households

Malnutrition in early childhood has serious, long-term consequences because it impedes motor, sensory, cognitive, social and emotional development. Malnourished children are less likely to perform well in school and more likely to grow into malnourished adults, at greater risk of disease and early death. Malnutrition and micronutrient deficiencies are linked to:

Small ruminants can fit into farms in a variety of ways. Their grazing preferences make them ideal animals to feed on weeds, brush, and other plants that cattle often won't eat. The small size of sheep and goats means they require less space than cows, and makes them less likely to damage and compact soils. They are easier to work with than cattle, cheaper to buy and to maintain, and they require less equipment. Under the right conditions they are prolific and they tend to do well on forages. The varied products of small ruminants: milk, cheese, wool, meat, leather or skins, and manure, are easy to market, once a market is found (see the section on Marketing).

Poultry are by far the largest livestock group and poultry products constitute about 30% of all animal protein consumed worldwide - a proportion that is increasing and predicted to rise to 40% by the year 2015. Poultry production in most developing countries is based largely on scavenging backyard systems - and poultry are most likely to be kept by the majority of poor livestock keepers, even if they have no other livestock. Todd (1998) and Dolberg et al. (1999) indicate a variety of ways in which poultry are ideal for many smallholders and poor livestock keepers, and also represent an excellent tool for poverty alleviation. Some of these reasons include:

• A large proportion of households own poultry, both poor farmers with land as well as landless livestock keepers.
• Poultry tend to be mainly owned and managed by women and children.
• The necessary basic skills for poultry keeping are widely understood.
• There are few religious taboos related to poultry.
• Poultry are socially and culturally important.
• Low cost technology is available. Many or all of the required facilities can be home made, or made within the village.
• Very little initial investment is needed. Small loans for purchase of a few birds can be repaid very much easier than the costs of larger livestock.
• Land is not needed - other than the space for housing the birds and for meeting national agricultural regulations or mandatory guidelines.
• Village poultry production is relatively environmentally friendly.
• Poultry manure can form a valuable manure for household horticultural plots.
• Ten chickens under improved conditions are enough to make a significant difference for one household.
• Poultry production can be a self-sustaining and income generating system.
• Poultry production can serve to build up an entitlement base for poor women.

For the rural poor, livestock are:

• An important component of livelihoods.
• Are critical inputs to the diet and in reducing malnutrition.
• Are one of the most important sectors in terms of value-added land use.

• There is an increasing demand for livestock products.
• The global trend towards urbanization results in increased populations. demanding more meat and milk products.
• The developing world is projected to be the most important supplier to this growing market.

• Stricter environmental and public health regulations.
• Increasing consumer concerns about health and animal welfare.
• Increasing prices of grain, energy and transport.
• The need for technological improvements that need long-term commitment and financial resources.

• Mechanization is replacing animal traction.
• Inorganic fertilizers as a replacement for animal manure.
• A divergence between industrial production systems and smallholders as a result of the rapid expansion of livestock development, increasing the marginalization of smallholders.
• Increased vulnerability to epidemics, and concerns over food safety.
• Greater vulnerability to environmental degradation.