Dr Mandeep Azad and Dr Manmeet Motan
Policy makers in India are finally acknowledging a structural shift in the agriculture sector they have been noticing for a decade. Economic contribution of livestock is today more than that of food grain crops. When in 2002-03, monetary contribution of livestock surpassed that of food grains, policy makers ignored it as a temporary coping mechanism of the poor in the face of sluggish agriculture due to repeated droughts. But livestock contribution has since remained higher by 5-13 per cent. In fact, both livestock and fisheries components have been growing faster than the crops component for a decade. A report for the 12th Five Year Plan accepted this shift by recognising livestock as the engine of agriculture growth.
Livestock now controls a quarter of the agriculture gross domestic product (GDP). In 2010-11, it generated outputs worth Rs 3, 40,500 crore (at current prices). This was 28 per cent of the agriculture GDP and about five per cent of the country’s GDP. “The total output from livestock was higher than the value of food grains (Rs 3, 15,600 crore) and fruits and vegetables (Rs 2, 08,800 crore), and this is going to go up substantially .After livestock, paddy is the next highest contributor to the agriculture GDP. In 2009-10, output from livestock was 2.5 times the value of paddy and more than thrice the value of wheat, as per the Central Statistical Office data.
Livestock output is the fastest growing among the three components. Its contribution to the total output of the agriculture sector increased from 15 per cent in 1981-82 to 26 per cent in 2010-11.This provided a cushion to agriculture growth. The rate of growth of livestock output has however, slowed down. In 1980s, its growth rate was 5.3 per cent-almost twice that of the crops. This declined to 3.6 per cent in 2000s but is still 1.5 times the rate of growth of the crops component.
Importance of livestock as the “draught power” has declined due to mechanisation of agricultural operations and declining farm sizes. Use of dung is also being replaced by chemical fertilisers. At the same time, consumption of livestock products like eggs, milk and meat is increasing due to rise in the income of the booming middle class, both in urban and rural areas. Between 1983 and 2004, the share of animal products in the total food expenditure increased from 21.8 per cent to 25 per cent in urban areas and from 16.1 per cent to 21.4 per cent in rural areas.
Small and marginal farmers, landless labourers and women are more dependent on livestock for supplementing incomes and generating gainful employment in rural areas. Policy makers are taking a serious note of this new economy. It is now seen as a major support for the crops sector to project decent overall agriculture growth. For example, a note of the Economic Advisory Council to the Prime Minister on fiscal outlook for 2010-11, estimated an optimistic agriculture growth based on the growth in the livestock economy. The livestock sector is expected to emerge as an engine of agriculture growth in the 12th Plan and beyond in view of rapid growth in demand for animal food products. Livestock has assumed the most important role in providing employment and income generating opportunities. While crops still employ the maximum people, employment in livestock is fast catching up.
Rise of the livestock sector has implications for poverty. “Rural poverty is less in states where livestock contributes more to farm income,” concludes the Planning Commission report. Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh, Kerala, Gujarat and Rajasthan are a case in point. Mostly, marginal farmers and those who have quit farming are joining the livestock business. About 70 per cent of the livestock market in India is owned by 67 per cent of the small and marginal farmers and by the landless. One way, prosperity is now more dependent on per capita livestock ownership than on farms. “This implies that the growth of the livestock sector would have more effect on poverty reduction than the growth of the crops sector.
But this is not the full potential of the sector. Absence of policy focus has stifled the sector that caters to the poorest. India’s livestock productivity is 20-60 per cent lower than the global average. Deficiency of feed and fodder is the biggest factor responsible for 50 per cent of the total unrealised production potential, followed by inadequate breeding and reproduction, and increasing diseases among animals. As livestock is less prone to global warming and climate change, it can be considered more reliable than rain-fed agriculture. But livestock receives only 12 per cent of the total public expenditure on the agriculture and allied sector and four-five per cent of the total institutional credit flow into the sector. Hardly six per cent of the livestock are insured. Adoption of livestock-related technologies is poor because of absence of animal husbandry extension network. During the 11th Plan it was decided to establish the Indian Council of Veterinary and Animal Science Education and Research. It is yet to take off. The working group for the 12th Plan has repeated the suggestion.
Livestock have a variety of characteristics that make them important contributors to sustainable rural development. They provide marketable products that can be produced by small-scale, household production systems, and are generally of higher value and less vulnerable to critical harvest timing than many crops. As an agricultural product with relatively high income elasticity, livestock are particularly attractive as a means for rural households to participate in urban-based economic growth Many livestock holders can benefit directly from the increasing market demand for livestock products. Demand growth rates of 3 percent for cereals are less than half the demand growth for high value livestock commodities, demand for which is increasing by 6 to 8 percent annually. Furthermore, the poor can also benefit from the fact that livestock development creates demand for labour, supports economic linkages with the feed and processing industries, sustains trade balances, encourages food security through stronger supply and can lead to lower prices for food of animal origin. Livestock are also productive assets, which contribute directly to farm output through animal traction and indirectly as a store of wealth for future investment. Finally, they can contribute to soil fertility and recycling of agricultural waste
The shares of livestock and fruits & vegetables have shown an increasing trend in recent years implying that they have been growing at a much faster rate than the traditional crops sector. Given the rising share of high value commodities in the total value of agricultural output and their growth potential, this segment is likely to drive agricultural growth in the years to come. Being highly perishable in nature, this segment requires faster and better linkages between farms and firms in terms of logistics, processing and organised retailing. This would entail institutional changes that can incentivise entrepreneurs to invest in building efficient and faster value chains that reduce wastages, and increase the incomes of the farmers at the bottom of the chain. Animals are natural capital, which can be easily reproduced to act as a living bank with offspring as interest, and an insurance against income shocks of crop failure and natural calamities.
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