LIVESTOCK FOR ACCELERATED AND INCLUSIVE GROWTH

Pratap S Birthal

National Centre for Agricultural Economics and Policy Research, New Delhi

IGIDR-IFPRI workshop on ‘Harnessing Opportunities to Improve Agri-Food Systems’ July 24-25, 2014

Background

Target of 4% growth in agriculture How to accelerate agricultural growth?

Area expansion, price increases, technology, diversification

Can diversification toward animal production accelerate growth?

Smallholders (<2ha): Size of land holding (0.6ha)

Can such tiny pieces support their livelihood and come out of poverty?

Exit from agriculture or Diversify towards activities that generate more income such as horticulture and animal production?

Will smallholders benefit from livestock-driven growth?

•2

How does livestock contribute to agricultural growth and poverty reduction?

Food and nutrition

Energy in agriculture,

fertilizers and domestic fuel

Regular cash income

Insurance and banking function

Equity: Inter-household and

intra-household

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Organization?

The way forward to convert challenges into opportunities?

Challenges in livestock development?

Livestock be an engine of agricultural growth and a pathway out of poverty?

Opportunities for livestock sector to grow?

4

Opportunities?

Changing food basket: share of animal products in food expenditure increased from 20.3% in 1993-94 to 26.1% in 2011-12 in RURAL, and from 26% to27.5% in URBAN segment

Income growth and urbanization By 2020 demand for milk is expected to be 156 Million tons, and of meat and eggs to be 13 Million tons

Share of livestock products in agricultural exports increased from 3.7% during 1991-95 to 8.9% in 2005-10. Buffalo meat is the main export product

Exports of Buffalo meat vs Basmati Rice (US$ Million)

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Basmati RiceBuffalo Meat

India’s share in global bovine meat export (QTY)

0%

5%

10%

15%

20%

25%

30%

35%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Australia Brazil EU 27 India New Zealand US

What turned India largest exporter?International factors:

• Appreciation of major exporting countries vis-à-vis exporting countries making exported

meat costly.

• Reduction in producer subsidy in EU

• Mad cow disease in late 1990s in Europe, and in the early 2000s in US

• EU restriction on Brazilian imports for safety reasons

• India is close to key markets of South East Asia and Middle East ; low shipping cost.

Domestic factors

• India supply ‘HALAL’ slaughtered meat a desired requirement in Islamic countries.

• Low cost of production hence low price

• There is no practice of using hormones, antibiotics or any other chemicals for fattening.

• Indian buffalo meat is lean and blends well with other value-added products.

• Indian buffalo meat is low in fat and cholesterol and is free from radiation.

• Disease free (Rinderpest, mad cow disease, program on FMD).

Traditional markets: Malaysia, Philippines, UAE, Jordan, Oman, Kuwait, and Iran.

New markets: Vietnam, Saudi Arabia, Syria, Thailand, Angola, Algeria, Congo and Egypt.

Major destinations now are: Vietnam, Malaysia, Thailand and Egypt..

Indian buffalo meat price vis-a-vis world beef price (US$/t)

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India

World

Livestock Generates Agricultural Growth

(% annual growth)

Crops Livestock Fisheries Forestry Agriculture

% share in agricultural GDP

TE1982-83 72.1 18.8 2.8 6.3 100

TE1992-93 69.2 22.4 3.8 4.6 100

TE2002-03 67.2 24.4 4.5 4.0 100

TE2010-11 65.1 26.5 4.7 3.8 100

% annual growth

1980-81 to 1989-90 2.71 5.3 6.6 -0.05 3.2

1990-91 to 1999-00 2.76 3.9 5.1 1.27 3.0

2000-01 to 2010-11 2.65 3.9 3.4 1.90 3.1

1980-81 to 2010-11 2.76 4.3 5.1 1.10 3.1

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Average Value of Output of Livestock vis-à-vis Foodgrains , (Rs billion at 2004-05 prices)

Livestock Milk Foodgrains Rice Wheat

1980s 870 563 1201 527 311

1990s 1300 883 1539 704 446

2000s 1864 1278 1685 771 51011

Livestock Cushions Agricultural Growth: Fluctuation in the of Output of Livestock and Crops

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Inclusiveness: % share of marginal farm households

1981-82 1991-92 2002-03

Rural households 41.2 48.3 48.4

Land 11.7 15.5 24.1

Livestock

Cattle 30.0 47.3 53.4

Buffaloes 27.9 35.8 50.3

Small ruminants 38.6 46.2 62.4

Pigs 56.0 49.9 76.8

Poultry 48.8 54.9 63.8

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Inclusiveness: poverty regressions

Dependent variable :

Poor=1 otherwise =0

Dependent variable:

Log absolute poverty gap

Coeff. t-stat Marginal

effect

Coeff. t-stat

Log per capita income -1.272 -45.660 -0.265 -0.319 -15.520

Proportion of income

from crops

-1.214 -22.480 -0.253 -0.333 -9.400

Proportion of income

from livestock

-1.726 -20.210 -0.360 -0.448 -6.990

Controls: Education and

social group

No. of observations 45094 14826

Chi2 3900.12 415.33

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Livestock and environment

• Negative externalities

– Over-grazing, deforestation, water pollution

– Methane emission from livestock: 12 million t

• Positive externalities

– Recycling of agricultural byproducts and residues save 40 million ha

– Substitution of fuel wood by dung cake saves 1.6 million ha

– Use of dung as manure saves 1.2 million t of NPK

– Tractors required to substitute 57million draught animals 5.5 million ; saving of diesel : 13.1 million t

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Concerns? Deceleration in yield growth of all types of dairy

animals: Number-driven growth cannot be sustainable in the long run

There is an yield gap from 40-50%

Breeding: AI 20%, success rate is poor

Feed and fodder scarcity: 11% in dry fodder, 35% in green fodder and 28% in concentrate feed

Decline in common grazing lands in quantity as well as quality

Poor livestock delivery systems despite having more than 50 thousand veterinarians excluding para-vets and 55 thousand institutions

POLICIES FOR

SUSTAINABLE GROWTH

Public spending on livestock

TE1992-93 TE2000-01 TE2008-09

Total spending (Rs million,2004-05 prices) 37396 41561 47261

% of total agricultural spending 13.6 9.9 4.6

Public spending as % of livestock VOP 3.6 2.8 2.3

Composition of public spending (%)

Dairy development 41.5 38.6 25.0

Veterinary services and animal health 23.7 24.1 29.1

Cattle and buffalo development 14.0 11.7 10.5

Sheep and wool development 2.7 2.4 2.0

Piggery development 1.8 0.5 0.4

Poultry development 3.1 2.4 2.4

Fodder development 0.9 1.0 1.0

Direction and administration 4.2 8.7 19.1

Research, education and extension 2.2 3.0 3.0

Others 5.8 7.6 7.5

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Credit and insurance

• Share of livestock in agricultural credit has hardly ever exceeded 5%

• Livestock credit is treated as term credit

• Only about 30 million bovine heads are insured, of which 25% are insured under IRDP programs

• Bias in insurance against low-producing dairy animals

Marketing: Dairy cooperatives

1980-81 1990-91 2010-11

No. of societies 13284 63415 144246

Members, millionnumber

1.75 7.48 14.46

Milk procured,million tonnes

0.94 3.54 9.56

Milk procured, % 2.96 6.57 7.84

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NDDB

Unbalanced growth of cooperatives

% of output procured

States Share in total milk procured

Share in milk produced

Private plants

10-30% Gujarat (31%)

Maharashtra (15%)

Karnataka (25%)

TN (13%), Kerala (12%)

66% 27% Maharshtra (23%) Karnataka (5%)

<7% A P (5%), Rajasthan(6.2%), Bihar (3.5%), M P (2.3%), Orissa, (4.5%) W B (3.1%)

19% 34% Weak

Uttar Pradesh (2%), Punjab (3.2%), Haryana (2.5%)

10% 34% Strong (55%)

NDDB

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National Dairy PlanGenetic enhancement through AI:

Increase number of high genetic merit bulls and import of exotic purebred bulls or equivalent embryos.

Increasing the annual production of high quality semen to 100 million doses to improve AI coverage from 20 per cent to about 35 per cent.

Doorstep AI delivery services

Feed and nutrition: Awareness about the balanced ration Improve supply of certified / truthfully labelled fodder seeds.

Conservation of green fodder through silage for use in fodder deficit areas.

Marketing Strengthen existing dairy cooperatives

Promoting Producer Companies.

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Thank You