Livestock sector development and implications for rural poverty alleviation in India

Jabir Ali

Agriculture Management Centre (AMC), Indian Institute of Management,
Lucknow - 226 013 (UP) India
jabirali@iiml.ac.in

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 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).

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 total cattle population in 2003. 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 2003. There has been a small decrease in total bovines in the country by 1.9% between 1997 and 2003.

Total ovine population has increased from 144 million in 1982 to 186 million in 2003. The number of goats increased from 95 million in 1982 to 124 million in 2003, but at a decelerating rate throughout. During 1997-2003, 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 1992-97, 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 2003. 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 2003-04.

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 1980-2003. Growth in total milk production, however, declined marginally from 5.3 percent during 1980s to 4.5 percent during 1991-2003.

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 1980-81 to 5.9 million tonnes in 2003-04 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 2003-04. 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 10.06 billion numbers in 1980-81 to 40.4 billion numbers in 2003-04. During 1980-2003, 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 1980-81 to 48.5 million kg in 2003-04. Annual growth in wool production was 1.7 percent per annum during 1980-2003, 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.

Value of livestock output

Agriculture is the major source of livelihood in rural India accounting for about one-fourth 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 1980-81 to 24 percent in 2003-04. 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 1980-81 to 1990-91 and 1990-91 to 2003-04, the annual growth has decelerated during 1990-91 to 2003-04 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.

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 1980-82 which has increased to the extent of 66.2 percent in 2001-03 due to various policy interventions for development of dairy sector in the country.

The contribution of meat and meat products has increased from 14.9 percent in 1980-1982 to 16.7 percent in 2001-03. 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.

In value terms, exports of livestock products have remarkably increased from US$90.8 million in 1980-82 to US$ 469.6 million in 2002-04 whereas imports declined from US$ 261.8 million to US$ 257.5 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.

In 1980-82, livestock products accounted for 3.7 percent of exports and 18.2 percent of imports of agricultural products. Share of livestock imports during pre-liberalization period was quite fluctuating with increasing trends but after liberalization it has drastically come down. The share of livestock exports during pre-liberalization period was steady which has significantly increased during post liberalization period. Interestingly, the share of livestock products in agricultural exports almost doubled since 1989-91, 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 1980-82 to US$ 469.6 million in 2002-04 (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 2002-04 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.

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$ 261.6 million in 1980-82 to US$ 257.4 million in 2002-04. In 1980-81 dairy products worth US$ 166.6 million were imported, which comprised 63.6 percent of the total livestock imports (Table 6).

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 2002-04. 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 2002-04 from 21.0 percent in 1980-82 and their value of imports increased from US$ 54.5 million in 1980-82 to US$ 184 million in 2002-04. 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 1980-82 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.

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 percent in 1983 to 68.1 percent in 1999-2000. 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 1999-2000. 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 1983. This however declined to 4.9 percent in 1999-2000. 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 1999-2000 it declined by more than 50 percentage points; from 4.8 percent in 1983 to 2.2 percent in 1999-2000. The proportion of female workers engaged in livestock sector has also declined from 14.8 percent in 1983 to 9.8 percent in 1999-2000. 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.

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.

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 1999-2000. Rural poverty in India has declined from 45.6 percent in 1983 to 27.1 percent in 1999-2000. The rate of decline varied across states.

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 output. The states with higher livestock share have low level of poverty and vice versa.

Tables 10 and 11 show distribution of livestock production across different size groups of rural households during 1991-92 and 2002-03. About 22 percent of the households did not have access to land for crop production in 1991-92 which has increased to 32 percent in 2002-03. 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).

A comparison of livestock holding among landless households between 1991-92 and 2002-03 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 2002-03 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.

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 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.

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.

• 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

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Received 17 October 2006; Accepted 9 December 2006; Published 8 February 2007

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