Livestock Economics, Marketing and Business Management

DEMAND PROJECTION FOR MILK

• It accounts for 97.1 million tones in 2005-06 with 65 per cent of the total value of livestock output.
• Though India is the world’s top milk producer, the percapita milk availability remains low at 241 grams per day (Economic Survey 2005-06) which is lower the minimum requirement of 250 grams per day as recommended by Indian Council of Medical Research.
• The demand for milk is estimated to be 191.3 Mt by 2020 assuming the growth rate of the economy at 5 per cent per annum.
• The milk supply projection have indicated a defit of 52.7 Mt by 2020.
• The impact of Agreement on Agriculture under globalization process has made the Indian dairy industry to face several challenges, including structural changes in production and trade patterns.
• India has one of the largest livestock economies in the world sharing 53 per cent of world buffaloes, 20 per cent of goats, 15 per cent of cattle, four per cent each of chicken and sheep and one per cent of pigs.
• Livestock production in India is predominantly supported with family labour and nearly 73 per cent of farms own livestock for draught and production of milk, meat and mutton.
• Fifty per cent of the draught power in farms is provided by cattle and 25 per cent by buffaloes.
• In Tamil Nadu, according to 1994 livestock census, cattle account for 35 per cent, buffaloes 11 per cent, sheep and goats 45 per cent and pigs around two per cent.
• During the past 30 years ending 1992, cattle population has grown annually at 0.3 per cent, buffaloes 1.4 per cent, goats 2.2 per cent, and poultry 4.4 per cent.
• In the recent five years, however, in white cattle, exotic and cross breeds have increased by 64 per cent whereas the indigenous cattle population has declined by 12 per cent, and black cattle has gone down by 6.3 per cent.
• Small farms, with less than two hectares in size hold 56 per cent of bovines and 62 per cent of small animals.
• Income from livestock is around one-third of farm income and approximately one-tenth of state domestic income.
• In fact, the livestock generates continuous cash flow, unlike that of crops with seasonal incomes by harvests, which introduce certain degree of stability in income and employment to farm households.
• The demand for livestock products has been increasing mainly due to changes in per capita income, in population, in dietary habits, and market structure.
• Prospectively, the world bank estimates the demand for livestock products in the year 2020 as, (in million tones)

Products	Demand	Supply	Gap (%)
Milk	497.01	281.51	-43.4
Eggs	7.21	7.69	06.7
Beef	3.74	6.93	85.3
Mutton	2.57	3.09	20.2
Poultry meat	1.35	2.18	61.5

• The demand has been projected at an overall growth of 5.5 per cent annually in GNP while the supply assumes its determinants would be stable over the last ten years.
• One could note that excepting milk all other products would be excess in supply.
• In actuals, there would be a supply gap of 216 million tones which needs to be bridged.
• The status of livestock development at the close of the current millennium indicates the existence of a small number of large capital intensive and market oriented livestock and poultry farms.
• The state and parastatals have contributed significantly to the organization and growth of dairy farms whereas private entrepreneurship and investment have shown the way poultry development could be.
• There are a number of issues one could identify for future actions.
• The focus is thus on productivity, trade and empowerment through structural, technological, market and institutional changes.
• Livestock in India is the endeavor of large number of small growers and they are low productive across all species.
• They are scattered across the country and depended very much on livestock for employment, income and continuous cash flows.
• Low capital output ratios and high employment absorption render the sector as a vehicle for rural transformation with high income and employment growth. However, they reflect low productivity warranting investment and technology in massive scale.
• A system of incentives for adoption of technology for higher productivity would immediately suggest a set of subsidies and insurance.
• Subsidies for livestock production, processing and marketing are mostly indirect and invisible.
• They come through poverty alleviation and rural employment programmes.
• Focus could be on institutional susbsidies, on the lines of Self Help Group support programmes, to get small livestock farmers get organized with seed money to support activities in production and processing.
• Disease control and hygiene are the major problems of livestock sector.
• Particular, India can not enter the world market as suppliers of livestock products unless and until the country becomes disease free for the relevant products.
• The annual loss due to foot and mouth disease, in terms of milk, is estimated to be in the order of Rs. 1252 crores in foreign exchange and another Rs.1650- Rs.1873 crores as loss of domestic supplies.
• In addition, loss due to permanent disabilities, death etc., amounts to Rs.1800 crores.
• Disease management is thus most crucial and the state can not leave this vital task to the private trade as disease prevention and control are in the public domain and form the public good for which little can be expected from market driven private agencies.