2. Background (1) Positive interactions between crop and livestock sectors. Differential impacts of FYM (Rasmussen et. al, 1998; Dawe, et. al., 2003; Edmeades, 2003; Hati et al., 2007) CropLivestock fodder Farmyard manure (FYM) Ordinary soilPoor soil Lowland ricelittleSome Upland cerealsSomeHigh

3. Background (2) Retail price of chemical fertilizer is very high. Examples: price (US$) of 50 kg of chemical fertilizer in 2006 –Kenya: 24.6 –Mozambique: 27.5 –Botswana: 39.5 –Ghana: 19.5 –Egypt: 6.7 –Int’l mkt: 17.9 (urea in 2007) Role of locally produced FYM as substitute for chemical fertilizer Upland cereals are the staple crops for many African countries

4. Research Issue It is important to consider how to incorporate livestock sector into ag development strategy for Africa Paucity of empirical research that explore the impact of crop sector development and livestock sector development together. TN has experienced GR (1970s~) and WR (1980s~). Using TN data, we investigate –How has the farming system changed over time? –What are the impacts? (by crop, by soil type) –How have they contributed to the poverty alleviation?

5. Data Cost of Cultivation of Principal Crops (CCPC) scheme in Tamil Nadu PeriodSamplingSample Size Questionnair e 1971-80Annual40 villages 400 HHs 1981-923-year rotating panel 60 villaegs 600 HHs 1993-onward3-year rotating panel 60 villaegs 600 HHs Detailed dairy data Soil type data

7. Findings from recent CCPC data (1993-2003) A direct impact of FYM application exists only for upland cereals but not for paddy. An indirect impact through an increase in the marginal product of chemical fertilizer is observed for both paddy and upland cereals, particularly when soil quality is inherently poor. The impacts are spatially constrained within a village where dairy sector development has taken place because FYM markets are not integrated beyond the villages due to its non- tradable attribute.

8. Key Hypotheses The development of dairy sector increases the supply of FYM. Productivity and profitability of crop farming increase faster (or does not decline faster) over time in the areas with the dairy sector development than in the areas without it. The above feature is more clearly observed for upland cereals than for lowland paddy, as well as for poor soil type areas than for rich soil type areas. Dairy development contributes to poverty alleviation in poverty prone area (cultivating upland cereal under poor soil condition).

9. Descriptive stat (1)

10. Descriptive stat (2)

11. Descriptive stat (3) Change of per capita HH income from 93- 95 to 2001-03. Good soilPoor soil Dairy villages 25  34 (35%) 20  30 (50%) Non-dairy villages 17  20 (18%) 14  19 (43%) Income: Rs. in 1973 value

12. Econometric Approach y ijt =f(X ijt, D jt ; a ij a j ) –y ijt : yield (paddy/cc), profit (paddy/cc), HH income of HH i in village j in year t –X ijt : determinants of HH –D j : village-level indicator of dairy sector development –a: fixed effects Can we safely assume D j is exogenous to each individual?  IV method?

13. Thank you very much