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

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)

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

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)

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

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

Dataset: Andhra Pradesh Region under studySample districts 4 districts 50 villages 20 hh/village

Descriptive statistics SamplePopulation AVGSDAVGSD Age HH headYears Education level hh headYears HH with dairy animals%8051 HH producing milk%7950 Nr of DA 2005Nr Nr of DA 2010 Nr Productivity DAL/day/DA

Descriptive statistics No DA1-2 DA3-5 DA>5 DAAVG Land owned(acres) Total income(Rs/year)91,047112,600242,280276,667125,615 Income from dairy(Rs/year)n.a.12,81029,47165,67010,482 Income from crops(Rs/year)39,19464,053173,664146,82570,114 Income per capita(Rs/year)29,46230,06155,11153,45034,066 Asset index Low caste (SC/ST)(%)

Income effects of participation

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

Who is producing milk?

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

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?

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)

Thank you!