Livestock sector and Economic Renaissance

Livestock sector and Economic Renaissance

Dr.T.P.Sethumadhavan

India is blessed with enormous animal wealth comprising 54%Buffaloes, 16%cattle, 21%goats, 5%sheep and 2%poultry population of the world. The country has 187.38 million cattle, which is about 15% of the world cattle population, of which around 12. 07 % are crossbred. Tamilnadu, Maharashtra, Kerala, Uttar Pradesh, Karnataka and Punjab account for 60 percent of the crossbred cattle population. 96.62 million Buffalo population in the country comes around 56 percent of the world Buffalo population. Indian livestock wealth worth Rs80000 Crores contributes Rs183000 Crores to the National GDP, which is over 1\3rd of the contribution from agriculture. Livestock sector provides employment to 70% of the population in rural areas. India is the highest milk producing country in the world with an annual production of over 92 million tones of milk. USA stands second with 71 million tones of milk. Out of 210 million cattle and 75 million buffaloes, more than 54 of milk is from buffaloes; which constitute around 33 Percent of livestock population. In terms of economic accomplishment, milk is number one farm commodity towards contribution to National economy. Per capita milk availability has touched now 238 gm per day. India today is the lowest producer of milk in the world in dollar terms at 27cents per litre compared with USA 63 cents and Japan’s 2.8 dollars. Major share of growth is attributed to dairy and poultry sectors. Country’s livestock population continues to grow steadily, especially among goats and poultry.

Of the total households in rural areas, about 73 percent own livestock. Income from livestock sector accounts for 15-40 per cent of total farm household incomes. Small and marginal farmers account for three fourth of this household raising 56 per cent of Bovine population. As per recent analysis of Associated Chambers of Commerce and Industry of India, farm sector can generate 13.7million jobs in the livestock sector alone. Livestock sector contributes 30 percent of the total income from agriculture in the country, whereas in southern states it is more than 40 percent. Annual growth rate in agriculture during the year 2007-08 is only 2.6 Percent, whereas in livestock sector it is more than 4 times in agriculture. Commodity share is 3.53 as against 3.5 in agriculture. More than 70 percent of the rural households in India depend on livestock sector for supplementary income. Economic review suggests that women carry out more than 90 percent of the activities related to care and management of livestock.


Analysis of the trends over the last two decades indicates that the growth in poultry and dairy sectors has exceeded the growth in cereal production. This may be due to rapid urbanization, population growth, rising levels of income and falling prices of livestock products. There are certain indications, which suggest that the demand led livestock growth is expected to continue and by 2020 more than 60 percent of meat and 50 percent of milk will be produced in the developing countries. China and India are likely to emerge as the primary producers of meat and milk respectively.


Even though India is the largest milk producing country in the world, Productivity per animal is only less than 50 % of the world average. This is mainly due to poor level of nutrition and low genetic potential for milk production and health care. Projected gap between demand and supply of green and dry fodder presents a challenge for fodder production in the coming years. Studies done by NDDB revealed that 45% milk is consumed as liquid milk, 28% as Ghee, 6 percent as Butter, Khoa and 7 percent as Dahi and 2.6 % as milk powder. In general consumption expenditure on milk and milk products is next to cereals and is rising steadily over the years. Demand elasticity estimates of Indian dairy industry for milk and milk products combined are 1.65 in rural and 1.15 in urban India. (Dutta and Ganguly 2000). Moreover expenditure elasticity of demand for milk and milk products for lower income class is considerably greater.

Livestock markets in the world are changing dramatically. In the developed world demand is relatively stable and there are increasing concerns over the systems of livestock production and safety of livestock products. The picture in the developing country appears markedly different. Demand for livestock products is predicted to increase by 5 % or more per annum. This demand for livestock products will be met from different sources, largely domestic but also international.
It is expected based upon the extrapolations from current livestock trade pattern that most of the projected increase in the livestock demand will be met from within the developing world. Meeting this demand will require enormous increases in supply of feeds and other inputs, scaling up of livestock production, processing, distribution and marketing and much improved systems for assuring the quality and safety of livestock products for the consumers. Avian Flu, SARS, Foot and mouth Disease, etc, is influencing the changing patterns of livestock production associated with livestock revolution.

How poor will benefit from the increasing consumption of livestock products will depend on a number of policy, technology and research choices. There is evidence from several countries that small holders are very competitive under the right circumstances (Delgado et al 2001).

Market opportunities for the poor can be greatly improved by paying specific attention to social equity and environmental issues that are at present largely ignored. Selective investments in infrastructure, co-operatives, contract farming arrangements and other pro poor market mechanisms. Public support is required for appropriate health and food safety systems that benefit the poor. These changes will require new ways of doing business and strategic research that targets the priority concerns of the poor. There is great potential for increasing the assets, incomes and food safety of the poor from livestock production, marketing and consumption.

While giving emphasis to production, marketing of the livestock products were not given due attention. Scientific breeding, feeding, management and disease control has been given due importance. When the issue of sustainability arises marketing will come in to picture. Livestock products except around 15 % of the milk produced are mainly traded through unorganized sector. In order to explore the rural market for livestock products our production strategy need to be market oriented in nature. It should be in tune with local, domestic and international market. Production and branding of traditional livestock products, which fetches good price, should be promoted.

There are certain pre requisites for popularizing market oriented production strategy for livestock products in the country. It should be economically viable. Cost of production has to be reduced considerably without affecting the quality of products. Changes in the extension approach, market forecasting system, value addition, awareness on diseases affecting trade of livestock products, consumer behavior, production of livestock products based on the demographic characteristics of the population, good manufacturing and retail practices, best production practices and implementation of food safety norms, etc need more emphasis.

Extension approach should be need based and participatory in nature. It should be an integrated systems approach having problem-solving dimension. This so called strategic extension approach should make all efforts to improve the production while giving due attention to marketing. Farmers need to be given more awareness on value addition, food safety norms, branding and problems and prospects of marketing including the four cardinals of marketing like product, price, promotion and place. As told by the world marketing Guru Philip Kotler in today’s world of IT explosion branding is becoming more important than before. One needs to redefine the role of marketing as creating, communicating and delivering value to the consumer. Value addition of livestock products should be based on consumer needs and taste, like fat free milk for cardiac patients, chocolates for children, quality cheese for international market, etc.

Rapidly increasing demand for livestock products, along with the changes in international trade, is placing pressure on Asia's livestock sector both to expand and adapt. This adaptation takes the form of two major shifts - a shift in livestock functions and species, and a shift in agro-ecological and geographical zones, involving structural and technological changes. Today, non-food functions of livestock are generally in decline and are being replaced by cheaper and more convenient substitutes. At the same time, financial institutions are replacing the asset, petty cash and insurance functions of livestock as even remote rural areas enter the monetary economy. Except for some parts of South Asia, the animal as draught power is declining as more farmers mechanize, partly attracted by government subsidies. Manure continues to be important in mixed farming but its role in overall nutrient supply is diminishing because of the competitive price and ease of management of inorganic fertilizer. The same applies to animal fibres: although the demand for natural fibres is still high, and in many places even increasing, there are a growing number of synthetic substitutes for wool and leather.
Connected with this is an increasing selectivity as to the parts of the animal used for food. Now the trend is towards lean meat, and other products - such as offal, blood and bone - are being increasingly used industrially, or recycled as feed. Thus, there is a trend from multi-purpose to single purpose animals, with animal protein the overriding objective. This is also reflected in the choice and manipulation of genotypes, which favor specialization over product diversity. Another trend is the growing importance of monogastric as economic converters of concentrate feed.
Two other basic trends can be observed: livestock production is growing faster in the moist parts of the region, and it is moving closer to urban settlements. In Asia, as in the rest of the world, it is the humid and sub-humid zones that still offer a large potential for agricultural production. Human populations are increasing over-proportionally in these areas while other zones, such as arid and highland areas have reached a level of population density above which significant increases can no longer be sustained. Livestock populations are increasing faster in the moister areas than in other zones.
Structural changes. Two important structural changes apply across production systems: a general growth in scale and a trend away from horizontal to vertical integration. Levels of livestock production and processing are increasing in response to technological development, market requirements and insufficient returns to labor in traditional systems. Where alternative employment opportunities exist, such as in the rapidly industrialized countries of the region, traditional subsistence-orientated livestock farming is often abandoned, opening up market and expansion opportunities for other farmers or commercial entrepreneurs.
In particular, poultry production has often developed from a simple farm operation to a complex vertical operation of related industries and enterprises, including grain production for animal feeds, feed mills, slaughterhouses and processing plants, food chain stores and wholesale enterprises.
Further structural changes relate to the new trends in the importance of different production systems. The growth potential for extensive grazing and roughage production is limited. In response to increased population pressure, good pastureland is being converted into cropland, leaving increasingly poorer land for grazing and mixed farming. Industrial production of pigs and poultry is therefore increasing relative to production from grazing and mixed farming systems. Pork and broiler production will also increase relative to ruminant meat production. This is a direct result of the better conversion efficiencies of concentrate feed in pigs and poultry.
Faced with increasing resource constraints that stem from a small land base, countries resort to importing meat and other livestock products to satisfy the growing demand. This is evidenced by a growing trade deficit in these products. The developing countries of Asia had a net trade deficit of 313,000 tons of ruminant meat and a net trade surplus of 409,000 tons of monogastric meat. While the region as a whole is self-sufficient in all livestock products, there are important differences between the sub-regions. Australia and New Zealand make up for the deficit of the other sub-regions, particularly for beef and milk.
Technological changes. In line with the structural changes outlined above, the development, transfer and adaptation of technologies will focus on improving efficiency of feed utilization and increasing animal productivity. Feed requires land for production and this continues to be the limiting factor to the sector's expansion even if countries resort to feed imports. Continuing industrial development in the region will also make traditional livestock raising practices less competitive because of diminishing returns to labor, even though this process will be very gradual.
We are therefore witnessing a dualistic mode of development, with two conflicting components. First, a modern, demand-driven and capital-intensive sector, producing poultry meat, eggs, pork, and sometimes milk, increasingly uses state-of-the-art technologies. It is rapidly expanding to meet urban demand but it is also susceptible to market upheavals; it generates little employment, poses great environmental risks because it tends to concentrate in areas with good market access, and it creates a number of new challenges for human and veterinary public health. Technology uptake has been fast, driven by commercial interests.
At the same time, a traditional, resource-driven and labor-intensive sector continues to provide a multitude of services to subsistence-oriented farms. While not efficient in terms of introduced inputs, this sector uses resources of little or no alternative uses, and for the same reason, its potential to expand beyond moderate growth rates is constrained by low technology uptake, insufficient market facilities and infrastructure, and small economies of scale. Often, these systems are closed cycles of nutrients, farm labor, energy, etc. Unless these cycles are broken, technology uptake will remain constrained.
Production system pathways. Livestock systems develop in response to resource endowment and market opportunities. Grazing systems have limited scope for expansion. Mixed farming systems will see continued intensification and important growth, with livestock based on crop by-products and surplus. Some productivity gains can be achieved by further enhancing nutrient and energy flows between the crop and livestock component. Mixed farming system may be threatened by the disappearance of livestock, triggered by population pressure, fragmentation of arable land, poverty and lack of market access.
Under more favorable agro-ecological and market conditions, industrial systems have emerged, in parallel with, and sometimes supplanting, mixed farming systems. Because of generally poor infrastructure and institutions, these are usually established close to demand centers, resulting in excessive animal densities, nutrient surpluses and other environmental and human health problems that highlight an "urban trap": while profitable in the short run, these systems cannot be sustained in urban or peri-urban environments. Such considerations caused, for example, Singapore, to abandon livestock production altogether. The answer is to allow specialized commercial production to operate in an area-wide concept where nutrient balances are maintained and the land's capacity to absorb animal waste is respected.
The evolutionary and significant trends described above must, if they are to be sustainable and progressive, take into account their impact on the public domain or public goods. These face four main challenges which include: the contribution of livestock to food security and food production; the protection of the environment in the face of increasingly intensive farming methods; the maintenance and generation of social equity which may be jeopardized by industrialization and job loss; and the protection of human health and welfare.
It is therefore essential that policy makers and planners responsible for livestock development define future strategies in the broader context of human development and the sustainable utilization of our limited natural resources.