Dairy Development in India: A strategy for pro-poor growth?

1. Dairy Development in India: A strategy for pro-poor growth? Mara Squicciarini AnneleenVandeplas Johan Swinnen LICOS, KU Leuven

2. Introduction • India is home to 1/3 of the world’s poor • Poverty headcount around 400 million • Growth in agriculture is considered far more effective for poverty reduction and ensuring food security than in manufacturing or services (Ravallion, 2009)

3. Introduction • Dairy is considered a sector with great potential for pro-poor development and increasing food security • With poor access to land, activities which require less land offer more potential for poverty reduction than e.g. crop farming • Dairy is said to have potential for “huge employment generation” • Important nutritional benefits

4. Research Question • Does dairy production contribute to rural livelihoods? • Does dairy production offer potential for pro-poor growth? • Micro-econometric analysis of a unique primary dataset on 1000 rural households in Andhra Pradesh (India)

5. Relevance • Agricultural policies in India • International trade negotiations • Poverty reduction strategies by NGOs • Wider bio-economy: importance of preconditions for successful pro-poor innovation

6. Dairy in India • India is largest milk producing country in the world • India’s milk market is the 2nd most important food market in the world • after China’s pork market • 40 billion $/year • 120 million MT/year • Dairy is a very traditional rural activity: • Animals for draught power • Fresh milk for home consumption

7. Dataset: Andhra Pradesh Region under study Sample districts • 4 districts • 50 villages • 20 hh/village

8. Descriptive statistics

9. Descriptive statistics

10. Income effects of participation • : income per capita, asset index, land ownership • : household characteristics: age & education of hh head and spouse, caste, religion, family engaged in dairy, elderly hh members, lagged land and asset ownership • Land is included in 2 different specifications • : village fixed effects (+clustered SE)

12. Findings • Income per capita • Positive impact of dairy • Positive impact of land and other asset ownership • Asset index • No impact of dairy • Positive impact of land and other asset ownership • Land accumulation • Positive impact of dairy • Positive impact of land and other asset ownership

13. Who is producing milk? , with • : household characteristics: age & education of hh head and spouse, caste, religion, family engaged in dairy, elderly hh members, land and asset ownership • Land is included in 3 different specifications • : village fixed effects (+clustered SE)

15. Findings • Participation in dairy is mainly determined by • Family tradition • Cultural factors • Asset ownership • wealthier hh more likely to participate in dairy • Land ownership • hh with land (even if small) more likely to engage in dairy

16. Discussion of results • Dairy contributes positively to livelihoods • Both in terms of income per capita and in terms of land accumulation • No significant impact on other assets • Maybe because for hh with a positive attitude towards agriculture, investing in land has higher returns • However, when looking at who is involved in dairy production, we seem to find a pro-rich rather than a pro-poor bias • Land seems an important complementary asset • We do not (yet?) find much employment in dairy sector for external laborers • Maybe elsewhere?

17. Implications • Unless factor market imperfections are solved, dairy development may not offer as much potential for pro-poor growth as is often hypothesized • Mainly as a result of constrained access to land • If self-sufficiency in milk is their objective, policymakers need to address these constraints • Already milk has been found to contribute importantly to food inflation (Mishra & Roy 2011) • Milk price inflation increases incentives for adulteration of milk, as in China (Gale and Hu 2009)

18. Thank you!