1 Livestock Research for Rural Development 19 (2) 2007 Guidelines to authors LRRD News Citation of this paper Livestock sector development and implications for rural poverty alleviation in India Jabir Ali Agriculture Management Centre (AMC), Indian Institute of Management, Lucknow (UP) India Abstract Livestock sector plays a multi-faceted role in socio-economic development of rural households. Livestock rearing has significant positive impact on equity in terms of income and employment and poverty reduction in rural areas as distribution of livestock is more egalitarian as compared to land. In India, over 70 percent of the rural households own livestock and a majority of livestock owning households are small, marginal and landless households. Small animals like sheep, goats, pigs and poultry are largely kept by the land scarce poor households for commercial purposes due to their low initial investment and operational costs. In the recent decade, demand for various livestock based products has increased significantly due to increase in per capita income, urbanization, taste and preference and increased awareness about food nutrition. Livestock sector is likely to emerge as an engine for agricultural growth in the coming decades. It is also considered as a potential sector for export earnings. This paper analyses the development of livestock sector in terms of population, production, trade and employment on one hand and the role of livestock sector in reducing rural poverty on the other. Keywords: India. livestock, rural poverty Introduction Livestock sector plays an important role in socio-economic development of rural households. It contributes about 6 percent to the Gross Domestic Product and 25 percent to the Agricultural Gross Domestic Product. Over the last two decades, livestock sector has grown at an annual rate of 5.6 percent, which is higher than the growth of agricultural sector (3.3 percent). This suggests that livestock is likely to emerge as an engine of agricultural growth in the coming decades. It is also considered as one of the potential sector for export earnings. The importance of livestock goes beyond its food production function (Birthal et al 2002). It provides draught power and organic manure to crop sector and hides, skin, bones, blood and fibers to the industrial sector. Livestock sector also makes significant contributions towards conservation of environment. Livestock sector supplements income from crop production and other sources and absorbs income shocks due to crop failure. It
2 generates a continuous stream of income and employment and reduces seasonality in livelihood patterns particularly of the rural poor (Birthal and Ali 2005). Rural Poverty is largely concentrated among the landless and the marginal households comprising about 70 percent of rural population (Kozel and Parker 2003; Taneja and Birthal 2004). Several empirical studies indicate that livestock rearing has significant positive impact on equity in terms of income and employment and poverty reduction in rural areas (Singh and Hazell 1993; Adams and He 1995; Birthal and Singh 1995; Thornton et al 2002; Birthal and Ali 2005) as distribution of livestock is more egalitarian compared to land (Taneja and Birthal 2004). In India, over 70 percent of the rural households own livestock and a majority of livestock owning households are small, marginal and landless households. Small animals like sheep, goats, pigs and poultry are largely kept by the land scarce poor households for commercial purposes because of their low initial investment and operational costs (Birthal 2002). This paper analyses the development of livestock sector in terms of population, production, trade and employment on one hand and the role of livestock sector in reducing rural poverty on the other. Livestock population dynamics India has huge livestock population with 185 million cattle, 98 million buffaloes, 124 million goats, 61 million sheep, 14 million pigs and 489 million poultry birds (Table 1). Table 1. Livestock population in India (millions) Year Cattle Buffalo Sheep Goat Pig Poultry Million numbers Annual growth, % Source: Livestock Census (various issues), Ministry of Agriculture, Government of India Out of the total livestock in the country, around 38.2 percent are cattle, 20.2 percent are buffaloes, 12.7 percent are sheep, 25.6 percent are goats and only 2.8 percent are pigs. All other animals are less than 0.50 percent of the total livestock population. The composition of livestock population in broad groups like bovine (cattle and buffaloes), ovine (sheep and goats), pigs and poultry, however, has changed over the last two decades. Cattle population that had been increasing until 1992 has started declining and between 1992 and 2003, it declined by 9 percent. The decline in the cattle population is confined to indigenous stock that comprised 87 percent of the
3 total cattle population in The number of indigenous cattle declined by 15 percent, while that of the crossbred increased by 62 percent. Within the indigenous stock, decline was drastic for males (22%). The main reasons for decline in indigenous cattle population are: increasing substitution of draught animals with mechanical power and low milk yield (Birthal and Taneja 2006). The buffalo population has increased from 70 million in 1982 to 98 million in There has been a small decrease in total bovines in the country by 1.9% between 1997 and Total ovine population has increased from 144 million in 1982 to 186 million in The number of goats increased from 95 million in 1982 to 124 million in 2003, but at a decelerating rate throughout. During , the growth in goat population remained almost stagnant. Sheep population though has been increasing but with considerable variations in the trend. Poultry is gaining importance in India due to growth and availability of poultry feed at reasonable prices. Between 1982 and 2003, poultry population increased more than double, from 207 million to 489 million. Except during , poultry population has maintained a steady growth of above 4 percent a year. Between 1997 and 2003, poultry witnessed an all time high growth of 7 percent a year. Pig population has increased from 10 million in 1982 to 14 million in Growth in pig population, however, has decelerated sharply since 1992, due to lack of widespread demand for pork (Birthal and Taneja 2006). Livestock production Livestock sector provides a variety of food and non-food products. The major livestock products are milk, meat, wool and eggs (Table 2). India is the largest producer of milk in the world with an annual production of 88.1 million tonnes in Table 2. Production of livestock products in India Commodity Production, million % annual tonnes growth Milk Cow Buffalo Goat Meat Beef and Veal Buffalo Meat Goat Meat Mutton and Lamb Pig meat Poultry Meat Egg, billion number
4 Wool, million kg Source: 1. Basic Animal Husbandry Statistics, DAHandD, GoI for Milk, Eggs and Wool 2. FAOSTATS for Meat production Milk production is continuously increasing since the initiation of Operation Flood in the early seventies on account of improved technological changes and creation of market linkages between rural producers and urban consumers through the network of dairy cooperatives (Ravishankar and Birthal 1999; Birthal and Taneja 2006). Yet the productivity is low as compared to many other countries and the world average. Buffalo and cow are important milch species with a share of 55 and 43 percent respectively in total milk output, and goats account for the rest. The milk production grew at a rate of 4.4 percent per annum during the period of Growth in total milk production, however, declined marginally from 5.3 percent during 1980s to 4.5 percent during The growth in meat production has been faster as compared to milk production. Total meat production in the country has increased from 0.9 million tonnes in to 5.9 million tonnes in at an annual rate of 9.3 percent. In early 1980s small ruminants were the major suppliers (44%) of meat, followed by large ruminants (35%), and poultry (19%). The meat production structure however changed drastically during 1990s; monogastrics (poultry and pigs), especially poultry, emerged as the most important meat supplier with significant share of 27 percent in It may be noted that growth in meat production has largely been driven by the increase in number of animals slaughtered as the yield growth was negligible in case of almost all the species. Recent trends, however, indicate improvements in meat yield of cattle, buffalo and sheep, and a decline in meat yield of goat and pig (Birthal and Taneja 2006). Egg production in the country has increased from billion numbers in to 40.4 billion numbers in During , egg production has increased at the rate of 5.8 percent a year. Genetic improvement efforts have contributed substantially to this. About two third of the total egg production in the country, come from improved layers. Average egg yield of an improved layer is 232 eggs/ annum, which is more than double the yield of an indigenous layer. Clearly, there is considerable scope for increasing egg production through substitution of indigenous layers with the improved layers. The average yield of eggs in India is higher than the world average and average yield in developing countries but it is slightly lower than the average yield in developed countries. Wool production in India has increased from 32.0 million kg in to 48.5 million kg in Annual growth in wool production was 1.7 percent per annum during , which was much lower as compared to annual growth in other livestock products. Domestically produced wool is poorly suited to garment production and fine wool is generally imported from Australia (World Bank 1999). The wool and hair produced in India mostly with a diameter greater than 30 microns is used for furnishings, carpets and industrial fabrics. The production level of wool in the country is much lower than the existing demand in the wool processing industry. This gap is more critical in case of fine wool with a diameter of less than 25 microns.
5 Value of livestock output Agriculture is the major source of livelihood in rural India accounting for about onefourth of Gross Domestic Product (GDP). The gross domestic product from agriculture sector has increased significantly; its share in GDP has declined from 35.7 percent in to 24 percent in Livestock contributes nearly 25 percent to the gross value of agricultural output, and it has been increasingly consistently. In fact, the growth in livestock sector has always remained higher than the growth in crop sector. Though in absolute terms, value of output of various livestock products increased during to and to , the annual growth has decelerated during to for almost all the products (Table 3). The annual growth in pork, poultry meat and eggs is higher than the growth in milk and meat from other animals. Table 3. Value of output from livestock sector in India Value, Rs. in Bllions at prices Annual growth rate, % Commodity Food based products Milk Group Meat Beef and Buffalo meat Goat meat/ Mutton Pork Poultry Meat Meat Products Eggs Non-food based products Livestock, Total Source: National Account Statistics (various issues), CSO, Ministry of Statistics and Program Implementation, GOI. The major share of livestock output comes from food based products, which constitutes 86.7 percent of total value of livestock sector (Table 4). Milk and milk products have contributed 62.2 percent to the total value of livestock sector in which has increased to the extent of 66.2 percent in due to various policy interventions for development of dairy sector in the country. Table 4. Composition of value of output from livestock sector in India, % Commodity Food based products Milk Group Meat Beef and Buffalo meat Goat meat/ Mutton Pork
6 Poultry Meat Meat Products Eggs Non-food based products Livestock, Total Source: National Account Statistics (various issues), CSO, Ministry of Statistics and Program Implementation, GOI. The contribution of meat and meat products has increased from 14.9 percent in to 16.7 percent in However, the composition of meat output has been changing significantly towards poultry sector. Trade in livestock products Livestock products account for about one-fifth of the global trade of agricultural products. India, however, does not have a significant presence in global livestock trade. India shares only 0.3 percent of world exports and 0.4 percent imports. The global market for animal based foods has been expanding rapidly (Birthal and Taneja 2006). Trends in India's exports and imports of livestock products for the last two decades are shown in figure 1. Figure 1. Trends in livestock sector trade in India In value terms, exports of livestock products have remarkably increased from US$90.8 million in to US$ million in whereas imports declined from US$ million to US$ million during the same period. India was a net importer of livestock products during 1980s. This sector now holds good export potential as its exports exceeded total imports significantly. The situation turned around during early 1990s due to increasing exports of meat and meat products and significant decline in imports of milk and milk products. The process of trade liberalization and the efforts made by the government in recent times have certainly boosted the country's exports of livestock products to newer heights, which is clearly visible from the increasing surplus of livestock trade earnings in recent years (Figure 1). Figure 2 shows the share of livestock trade in total agricultural trade in the country over last two and half decades. Figure 2. Share of livestock products in agricultural trade In , livestock products accounted for 3.7 percent of exports and 18.2 percent of imports of agricultural products. Share of livestock imports during pre-
7 liberalization period was quite fluctuating with increasing trends but after liberalization it has drastically come down. The share of livestock exports during preliberalization period was steady which has significantly increased during post liberalization period. Interestingly, the share of livestock products in agricultural exports almost doubled since , while that in import fell drastically from 16.0 percent to 5.5 percent. Livestock exports India's export earnings from livestock products have remarkably increased from US$ 90.9 million in to US$ million in (Table 5). The exports of meat and meat products, dairy products and eggs registered a remarkable increase during this period. These accounted for 72.8 percent, 13.4 percent and 10.4 percent of total livestock exports in respectively. The export of live animals grew until mid-1980s and thereafter declined gradually. There was wide fluctuation in export of hides, skin and animal fats. Table 5. Trends in value of livestock sector export from India Commodity Exports Value, 1000$ % Composition Live Animals Dairy Products Meat and Meat Products Wool and Hair Hides and Skins Animal Fats Eggs Livestock Products, Total Source: FAOSTAT Though India's export earnings from livestock trade in the country are growing at the rate of 8 percent per annum, its trade direction is largely concentrated in Asian and African countries. For expanding the global market domain, more attention is required to improve the quality and hygiene of livestock products. Livestock imports India's import of livestock products declined from US$ million in to US$ million in In dairy products worth US$ million were imported, which comprised 63.6 percent of the total livestock imports (Table 6). Table 6. Trends in value of livestock sector import in India Commodity Imports Value, 1000$ % Composition Live Animals Dairy Products Meat and Meat Products Wool and Hair
8 Hides and Skins Animal Fats Eggs Livestock Products, Total Source: FAOSTAT Most of the imports, however, were in the form of food aids and were canalized through NDDB (Birthal and Taneja 2006). Import of milk declined sharply to US$ 17.3 million in This sharp decline in milk import may be attributed to sustained increase in domestic supply. Meat imports in India are meager and only highly processed meat products are imported in the country. These trends in meat imports are not because of any restrictive policy but because a large portion of meat consumers are very particular about the process of meat production followed i.e. Halal. Therefore, though India is considered to be potential market for chicken legs from USA, the consumer behaviour favouring fresh and Halal meat will not accept much of these product inflows. During 1990s, wool and hair emerged as the main item of livestock sector imports. Their share in total imports of livestock products increased to around 71.5 percent in from 21.0 percent in and their value of imports increased from US$ 54.5 million in to US$ 184 million in India mainly imports apparel wool, as the domestically produced wool is unsuited for apparel manufacturing. The imports of hides and skins increased substantially to meet the growing demand of domestic industry. The import of animal fats was one of the important livestock items during with a significant share of 14.6 percent which has declined substantially during 1990s. Employment generation Table 7 gives a synoptic view of the employment in livestock vis-à-vis other sectors. Crop production continues to be the main source of employment in rural India. Table 7. Sectoral distribution of rural workers in India (%) Sector description Total persons Male Female Crop production Livestock production Plantation Forestry and logging Fishing Agricultural services Non-farm sector Total Source: Results on Employment and Unemployment Situation in India (various issues), NSSO, Ministry of Statistics and Program Implementation, Govt. of India. Though the share of agricultural sector in gross domestic product has declined over time, the proportion of workers engaged in it has declined marginally from 70.5
9 percent in 1983 to 68.1 percent in On the other hand, share of non-crop activities (livestock, fishing, forestry, agricultural services, etc) has been witnessing a downward trend. Their share declined from 11 percent in 1983 to 8 percent in Most of the decline in employment in non-crop activities is due to a faster decline in the employment in livestock sector. Livestock sector engaged about 8.5 percent of labour force in This however declined to 4.9 percent in This shows that decline in livestock sector employment was sharper during 1980s as compared to 1990s. Table 7 indicates that a sectoral shift is taking place in rural employment, though slowly. A disaggregated view of sectoral allocation of labour force by sex is more revealing. Proportion of male workers engaged in crop and livestock production has been gradually declining. The decline is more apparent in case of livestock sector. Between 1983 and it declined by more than 50 percentage points; from 4.8 percent in 1983 to 2.2 percent in The proportion of female workers engaged in livestock sector has also declined from 14.8 percent in 1983 to 9.8 percent in The proportion of both males and females engaged in livestock sector declined more during 1980s than in 1990s. It is evident from Table 8 that as compared to males, females allocate more time to livestock production activities. Table 8. Female labour employment as percent of total employment by sector Sector description Crop production Livestock production Plantation Forestry and logging Fishing Agricultural services Non-farm Total Source: Results on Employment and Unemployment Situation in India (various issues), NSSO, Ministry of Statistics and Program Implementation, Government of India. This is more explicitly brought out by examining their share in total labour engaged in livestock production (Table 6). Females supply bulk of the labour needed for livestock production activities. During 1980s, 65 percent of the labour requirement in livestock sector was contributed by females, and this increased to 71 percent during 1990s. On the other hand, their contribution to crop production labour requirement has almost remained unchanged at 37 percent, and to the non-farm sector it has declined from 25 percent during 1980s to 22 percent during 1990s. This suggests that livestock enterprise is women oriented and growth in livestock production would help improve gender equity.
10 Rural poverty and livestock sector The challenges for redressing poverty in rural areas is mainly related with expansion of economic opportunities, empowerment of poor to take advantage of new opportunities and an effective safety net to reduce vulnerability and protect poorer of the poor (Kozel and Parker 2003). Poverty is primarily caused by low level of assets holding coupled with low and uncertain returns. Land and livestock are considered to be the major assets of rural households for livelihood support in general and small and marginal households in particular. As distribution of land holdings in rural India is highly skewed towards medium and large framers, rearing of livestock particularly small ruminants, pigs and poultry are considered to be the potential options for poor households to earn their livelihood on sustainable basis. Table 9 shows the trends in rural poverty in major states of India over the period of 1983 to Rural poverty in India has declined from 45.6 percent in 1983 to 27.1 percent in The rate of decline varied across states. Table 9. Rural Poverty across major States (%) States Andhra Pradesh Assam Bihar Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal All India Source: Planning Commission, Government of India A faster decline is observed in the states of Punjab, Haryana, Andhra Pradesh, Gujarat, Karnataka, Kerala, Maharashtra, Rajasthan and Tamil Nadu. These states have experienced faster growth in agriculture and/or livestock sectors. On the other hand, in states like Bihar, Orissa, Uttar Pradesh and West Bengal the intensity of poverty is still high. Figure 3 shows relationship between the incidence of rural poverty and share of livestock sector in total agricultural output for major states of India. There is significant inverse relationship between poverty and value of livestock
11 output. The states with higher livestock share have low level of poverty and vice versa. Figure 3. Poverty and Livestock Output across major states, Tables 10 and 11 show distribution of livestock production across different size groups of rural households during and About 22 percent of the households did not have access to land for crop production in which has increased to 32 percent in About 48 percent of the households have land holdings less than one hectare. The size of land holding particularly of the marginal landholders is too small to provide an adequate livelihood. These households seek supplementary livelihood opportunities from livestock and allied activities. Livestock being less capital-intensive is an important option for them, because of less land requirement, low initial investment and operational cost (Birthal and Ali 2005). Table 10. Distribution of livestock holdings in India Category Landless, <0.002ha Marginal, ha Small, ha Medium, ha Large, >4.0 ha All % households Distribution of livestock, % Bovine Ovine Poultry Pigs Size of livestock holdings, no/100 households Bovine Ovine Poultry Pigs Source: NSS Report No. 408, Livestock and Agricultural Implements in Household Operational Holdings , Ministry of Statistics and Program Implementation, GOI. Table 11. Distribution of livestock holdings in India Category Landless, <0.002ha Marginal, ha Small, ha Medium, ha Large, >4.0 ha % households All
12 Distribution of livestock, % Bovine Ovine Poultry Pigs Size of livestock holdings, no/100 households Bovine Ovine Poultry Pigs Source: NSS Report No. 493, Livestock Ownership Across Operational Land Holding Classes in India , Ministry of Statistics and Program Implementation, GOI. A comparison of livestock holding among landless households between and show that landless households significantly increased during the period whereas share of livestock holding among landless households declined for all type of livestock. Livestock rearing amongst landless households largely depends on common property resources such as common grazing lands, common water resources, forests, wastelands, fallow lands and roadsides for feed and fodder. The decline in availability of these resources has affected the landless households to quit livestock rearing. In case of marginal households, the share of livestock holding has substantially increased in for all types of livestock. Therefore, minimum availability of land for feed and fodder is an important determinant of size of livestock holding. But, given the resources with the land scarce households, the utility of livestock as provider of livelihood opportunities is far greater for them (Birthal and Ali 2005). The distribution of land and livestock is more explicitly shown by the Lorenz curves (Figure 4) which plots cumulative percentage of total value assets against cumulative percentage of number of households (Birthal and Ali 2005). The diagonal line represents zero inequality, while the area under the curve as proportion of total area under the diagonal line represents degree of inequality. Source: The data on value of assets were taken from NSS Report No. 500, Household Assets and Liabilities in India 2002, National Sample Survey Organization, Ministry of Statistics and Program Implementation, Government of India Figure 4. Lorenz curve for distribution of land and livestock assets by household classes It is clear from the Figure 4 that livestock is closer to the diagonal line, compared to the Lorenz curve for land, indicating that livestock is more equitably distributed than
13 land. Thus, the flow of income from livestock is also expected to be more favourable to low income groups comprising the landless, marginal and small landholders. To assess the impact of livestock on rural poverty, a log-liner regression equation was estimated by pooling time series and cross-section data with state as a unit of observation (Table 12). Though there are a number of factors that influence incidence of poverty, the per capita state income, share of livestock in agricultural output, share of agriculture in gross state domestic products, landless households and marginal households are included as explanatory variables in the regression equation. Table 12. Log-linear estimates for poverty and livestock sector Dependent variable: Log of poverty, % Explanatory variables Regression t-value coefficient Constant * Per capita GSDP, Rs/annum * Share of livestock output in agricultural output, % * Share of AgGSDP in GSDP, % Landless Households, % ** Marginal Households, % Log-likelihood function * Significant at 1 percent level ** Significant at 5 percent level The coefficient of all the explanatory variables is negative, which implies that improvements in these variables will lead to reduction in poverty level (Table 12). The coefficient of per capita income and share of livestock in agriculture output is significant at one percent level. However, the magnitude of regression coefficient on share of livestock is larger, indicating that growth of livestock sector contributes more to poverty reduction. Conclusion and suggestions Livestock sector in India has experienced remarkable growth during the last two decades in terms of production, value of output from livestock and trade. Livestock sector contributes nearly 25 percent to the gross value of agricultural output at the national level. At the household level, its contribution is much more in the case of small landholders who comprise a sizeable proportion of rural households, and control bulk of the livestock resources (Birthal and Taneja 2006). The contribution of livestock to rural employment witnessed declining trends in recent years. Though the proportion of workers engaged in livestock production declined, livestock production is more women oriented as women contribute more than 70 percent to the labour requirement.
14 Livestock asset is more equitably distributed than land. The regression analysis of relationship between poverty and livestock income has shown that growth in livestock sector contributes more towards poverty reduction. These results indicate that livestock can be used as an effective tool for reducing rural poverty. The declining trends in livestock holdings among landless households which constitute 32 percent of rural households, is an emerging issue which needs to be tackled urgently by providing adequate common property resources to ensure them sufficient livelihood opportunity. References Adams R H Jr and He J J 1995 Sources of Income Inequality and Poverty in Rural Pakistan, Research Report 102. International Food Policy Research Institute, Washington, D.C. Birthal P S 2002 Technological Change in India's Livestock Sub-sector: Evidence and Issues, In: Technology Options for Sustainable Livestock Production in India (P S Birthal and P Parthasarathy Rao, editors). National Centre for Agricultural Economics and Policy Research, New Delhi, International Crops Research Institute for the Semi-Arid Tropics, Patancheru, Andhra Pradesh, and International Livestock Research Institute, Addis Ababa. Birthal P S and Ali J 2005 Potential of livestock sector in rural transformation, In: Rural Transformation in India: The Role of Non-farm Sector (Rohini Nayyar and A N Sharma editors) Institute for Human Development and Manohar Publishers and Distributors, New Delhi. Birthal P S and Taneja V K 2006 Livestock sector in India: Opportunities and Challenges, presented at the ICAR-ILRI workshop on Smallholder livestock production in India held during January 24-25, 2006 at NCAP, New Delhi Birthal P S, Joshi P K and Kumar A 2002 Assessment of Research Priorities for Livestock Sector in India, Policy Paper 15, National Centre for Agricultural Economics and Policy Research, New Delhi. Birthal P S and Singh M K 1995 Structure of Rural Income Inequality: A Study in Western Uttar Pradesh, Indian Journal of Agricultural Economics, (30) 2. Pp Kozel V and Parker B 2003 A Profile and Diagnostic of Poverty in Uttar Pradesh, Economic and Political Weekly, January 25, Pp 385:403. Ravishankar A and Birthal P S 1999 Livestock Sector in India: Agenda for Future, Policy Briefs No. 07, National Centre for Agricultural Economics and Policy Research (NCAP) New Delhi. Singh R P and Hazell P B R 1993 Rural Poverty in the Semi-Arid Tropics of India: Identification, Determinants and Policy Interventions, Economic and Political Weekly (28)12 and 13. Pp A-9:A-15. Taneja V K and Birthal P S 2004 Role of Buffalo in Food Security in Asia, Asian Buffalo Magazine (1)1. Pp Thornton P K, Kruska R L, Henninger N, Kristjanson P M, Reid R S, Atieno F, Odero A N and Ndegwa T 2002 Mapping poverty and livestock in the developing world, ILRI, Nairobi, Kenya. World Bank 1999 India livestock sector review: Enhancing growth and development, The World Bank, Washington DC, and Allied Publishers, New Delhi.