Pro-Poor Livestock Policy Initiative Livestock Production and the Rural Poor in Andhra Pradesh and Orissa States, India Robin L. Turner Research Director: David K. Leonard University of California, Berkeley A Living from PPLPI Working Paper No. 9 Livestock CONTENTS Preface................................................................................................................. ii Abbreviations..........................................................................................................iii Executive Summary...................................................................................................iv Introduction.............................................................................................................1 Section I: Land, livestock, and poverty in India, Andhra Pradesh and Orissa...............................2 Section II: Sectoral overview......................................................................................13 ‘Cow’ politics .....................................................................................................13 State involvement in cooperative dairy......................................................................15 State service provision: Animal health and breeding......................................................17 Meat production..................................................................................................20 Section III: Recent Reforms........................................................................................22 Liberalization & the dairy market.............................................................................22 Grazing on common & state property: New restrictions..................................................24 New management strategies: Decentralization & user groups...........................................25 National livestock sector policy process .....................................................................27 Orissa livestock sector policy...................................................................................28 Andhra Pradesh’s Vision 2020..................................................................................32 Conclusion: Strategic Entry Points, Actors, and Alternatives................................................35 Enhancing producers’ ability to act on their own behalf..................................................35 Improving access to shared resources........................................................................36 Encouraging & enabling pro-poor animal health sector reforms.........................................37 Dairy sector: Reducing intervention and increasing competition........................................39 Small ruminant sector: Improving feed and fodder, researching markets & breeding...............39 References............................................................................................................41 TABLES Table 1: Poverty in Orissa and Andhra Pradesh.............................................................2 Table 2: Rural land ownership.................................................................................3 Table 3: Land and livestock ownership in Indian rural areas.............................................6 Table 4: Equity in livestock ownership in Orissa: Livestock ownership and land possession.......6 Table 5: Ownership of productive dairy animals and rural land ownership ...........................7 Table 6: Ownership of productive cows and Rural Land Ownership in Andhra Pradesh.............7 Table 7: Ownership of productive cows and rural land ownership in Orissa ..........................8 Table 8: Household possession of large ruminants in rural areas........................................8 Table 9: Selected household attributes and ownership of large ruminants in rural India ..........9 Table 10: Small animals and rural land ownership..........................................................9 Table 11: Market prices for livestock products in Orissa.................................................10 Table 12: Indian meat consumption: Market shares of various meats (Percent) (Mehta et al. 2002) .........................................................................................................11 Table 13: Percentage of households consuming meat, fish, and eggs 1993-1994 (Mehta et al. 2002)..................................................................................................11 i PREFACE This is the ninth of a series of Working Papers prepared for the Pro-Poor Livestock Policy Initiative (PPLPI). The purpose of these papers is to explore issues related to livestock development in the context of poverty alleviation. Livestock is vital to the economies of many developing countries. Animals are a source of food, more specifically protein for human diets, income, employment and possibly foreign exchange. For low income producers, livestock can serve as a store of wealth, provide draught power and organic fertiliser for crop production and a means of transport. Consumption of livestock and livestock products in developing countries, though starting from a low base, is growing rapidly. This paper analyzes the political economy of the livestock sector in two Indian states, Andhra Pradesh and Orissa. The aim is to identify politically feasible interventions that could have broad positive effects on poor rural livestock producers in these states. To that end, the paper assesses the relationship between land, livestock, and poverty, describes the organization of the sector, and analyzes the political and bureaucratic interests shaping livestock policy. We hope this paper will provide useful information to its readers and any feedback is welcome by the author, PPLPI and the Livestock Information, Sector Analysis and Policy Branch (AGAL) of the Food and Agriculture Organization (FAO). Disclaimer The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or its authorities or concerning the delimitations of its frontiers or boundaries. The opinions expressed are solely those of the author(s) and do not constitute in any way the official position of the FAO. Author Robin L. Turner, under the direction of David K. Leonard. Institute of International Studies, University of California, Berkeley. Acknowledgements Thanks are due to all my informants who were willing to share their thoughts and to educate me on livestock issues. I am especially grateful to Mr. Vinod Ahuja and Prof. David Leonard for their kind assistance and stimulating discussions. The views expressed in the paper are my own personal views, however. Keywords India, Orissa, Andhra Pradesh, policymaking, livestock, rural development, poverty. Date of publication: 16 January 2004. For more information visit the PPLPI Website at: www.fao.org/ag/pplpi.html or contact: Joachim Otte - Programme Coordinator Pro-Poor Livestock Policy Facility Email: [email protected] or [email protected] Tel: +39 06 57053634 Fax: +39 06 57055749 Food and Agriculture Organization - Animal Production and Health Division Viale delle Terme di Caracalla 00100 Rome, Italy ii ABBREVIATIONS AMUL Anand Milk Union Limited BJP Bharatiya Janata Party CPRs common property resources FARD Orissa Department of Fisheries and Animal Resources Development GATT General Agreement on Tariffs and Trade GCMMF Gujarat Cooperative Milk Marketing Federation GDP gross domestic product IAS Indian Administrative Services IDC Indian Dairy Corporation ISNRMPO Indo-Swiss Natural Resource Management Program-Orissa MACs Mutually Aided Cooperative Societies Act of Andhra Pradesh MMPO Milk and Milk Products Order NDDB National Dairy Development Board NGO Nongovernmental organization OF Operation Flood OLRDS Orissa Livestock Resource Development Society OLSP Orissa Livestock Sector Policy OMFED Orissa State Cooperative Milk Producers’ Federation PRIs Panchayati Raj institutions RSS Rashtriya Swayamsevak Sangh SIDA Swiss Agency for International Development TDP Telegu Desam Party iii EXECUTIVE SUMMARY This paper analyzes the political economy of the livestock sector in two Indian states, Andhra Pradesh and Orissa. The aim is to identify politically feasible interventions that could have broad positive effects on poor rural livestock producers in these states. To that end, the paper assesses the relationship between land, livestock, and poverty, describes the organization of the sector, and analyzes the political and bureaucratic interests shaping livestock policy. A review of available data on livestock ownership, land, and poverty shows that sectoral interventions must be carefully tailored to have pro-poor effects. Although livestock holdings are widely distributed in Andhra Pradesh and Orissa, as elsewhere in India, land ownership and livestock holdings are correlated. Poor livestock producers tend to own little or no land; these producers are often of low social status as well. Smallholders and landless households differ from other households in the mix of animals that they own and their means of supporting these animals. Poor livestock producers own fewer large ruminants (cows and buffaloes); they are more likely to possess small ruminants (goats and sheep) and backyard poultry. Poor producers are also more heavily dependent on common property resources—village pastures, water tanks, and local forests—for the feed and fodder their animals need. The distribution of benefits from sectoral interventions is shaped by these factors. The impact of a dairy sector intervention will depend upon the resources required to benefit from it; poor producers are unlikely to benefit from an intervention that requires land or financial resources. For example, improvements in the functioning of dairy cooperatives benefit all producers who own dairy animals. Provision of fodder seeds, on the other hand, is likely to benefit only those with arable land in which to sow the seeds. Measures that improve common resources or focus on small ruminants are likely to benefit poor producers. Livestock policy options are constrained by the broader political context. Because livestock producers are not an organized political lobby, policy in this area is shaped by broad policy trends and the agendas of more organized groups. Historically, livestock sector policy has focused on large ruminants and the state has sought to deliver necessary supportive services. This approach follows from the high political salience of Hindu nationalism and a deeply embedded statist approach to policy in the post-Independence period. Hindu nationalist groups have encouraged emphasis on vegetarian-friendly livestock policies—promote dairy rather than meat—and placed constraints on cow slaughter. Statist beliefs led the state to view provision of animal health and breeding services as a state responsibility and facilitated direct intervention in the cooperative sector. Recent sector reform policies reflect the broad ideological shift towards liberalism of the last decade. Reforms have opened the formal dairy market to private companies and imposed user charges for health services. Reformers also seek to reduce government involvement in cooperatives and propose to privatize veterinary practice. Such reforms place greater faith in the ability of the market to allocate services and goods. It is argued that reform implementation will be shaped by interested actors, such as state-employed veterinarians, as well as market forces. Other policy trends, such as forest closure and decentralization, have affected the livestock sector. All of these reforms will affect poor livestock producers—the paper discusses the likely effect of each reform—, but livestock producers have played little role in their development. However, those cases in which livestock sector actors have organized, as in the case of sheep and goat rearers in Andhra Pradesh and dairy cooperative sector leaders at the national level, demonstrate that actors can influence the content and implementation of sector policy within the broad constraints set by the political context. Based on this analysis, the paper discusses several options for strategic intervention in the livestock sector. The interventions with the greatest potential are the following. iv Executive summary One, actors can seek to improve producers’ capacity to articulate and advocate their interests. Two, actors can seek to increase access to shared resources such as forests and pastures. Three, actors can encourage pro-poor implementation of animal health service reforms. Four, actors can advocate further liberalization of the dairy sector. Five, actors can support small ruminant production by improving feed and fodder and conducting research on commodity chains and breeding. v INTRODUCTION The livestock sector has significant potential for improving the livelihoods of landless people and small and marginal farmers, who comprise the majority of India’s rural poor. Many poor rural Indians own livestock and gain some income from it. At present, resource and institutional constraints prevent poor producers from realizing the full potential of their animals. Expansion in the domestic livestock products market presents an opportunity for gain. Forecasters believe that domestic demand for dairy and meat products will grow substantially in the near future (Delgado et al. 1999). Strategic intervention is required to ensure that poor producers secure a greater share of the benefits from this expanding market. This paper analyzes the livestock sector in Andhra Pradesh and Orissa, situating these cases in the national context. These states were selected because they are actively pursuing sectoral development and reform; they do not represent the full diversity of India’s livestock production systems, agroclimatic conditions, or political environments and are not meant to be representative in this sense.1 Close attention to these cases can contribute to effective interventions in these states and elsewhere in India. Dairy and meat marketing, fodder and grazing issues, and animal health services are relevant throughout India. The analysis focuses on poor rural livestock producers; this paper does not investigate the impact of policies on livestock consumers or peri-urban livestock producers. Throughout, the paper highlights key factors affecting the political, social, and economic environment in which poor rural livestock producers attempt to secure a livelihood. The central concern is the interaction between the animals producers raise—cows, buffaloes, sheep, goats, poultry—and their environment rather than on divisions among poor producers.2 The aim is to identify leverage points with potential for broad positive effects on poor producers. Thus, the analysis presents broad generalizations regarding issues such as caste, land ownership, and local politics. Although little space is devoted to the complexities of these issues, the analysis seeks to be sensitive to the differential policy effects that may arise from characteristics such as remote location or social disadvantage. The paper is structured as follows. Section I provides an overview of the relationship between land, livestock, and poverty in India, Andhra Pradesh, and Orissa. This overview highlights the two parts of the sector with greatest potential for pro-poor interventions: dairy and small ruminant meat production. Section II provides an overview of the livestock sector. The political context surrounding livestock policy is discussed, highlighting constraints imposed by ‘cow’ politics, and the dominant policy approach and the organization of service delivery, processing, and marketing to 1991 are described. The actors and interests served by that system are identified. Section III focuses on sector reform efforts since 1991, the year in which the Government of India committed the country to market liberalization. Recent reform efforts in India, Andhra Pradesh, and Orissa are summarized, implementation prospects are analyzed, and their potential impact on poor livestock producers is evaluated. Because there are important linkages between state and national reforms, the discussion is ordered by theme rather than state or level of government. The concluding section reviews several options for strategic intervention, describing and analyzing their prospects. It is recommended that actors focus on improving producers’ capacity to articulate and advocate their interests, increasing access to shared resources such as forests and pastures, encouraging pro-poor implementation of animal health service reforms, advocating further liberalization of the dairy sector, and gathering information on small ruminant commodity chains and breeding. 1 Andhra Pradesh and Orissa are neighbouring states in eastern India. 2 This paper does not analyze the distribution of benefits or division of responsibilities within poor livestock producing households, and thus it neglects gender issues. See the following for extensive discussion of these issues (Katticaren 2000; Bravo-Baumann 2000; Pradhan, Ahuja, and Venkatramaiah 2003; Ramdas and Seethalakshmi 1999). 1 SECTION I: LAND, LIVESTOCK, AND POVERTY IN INDIA, ANDHRA PRADESH AND ORISSA India has 36 percent of the poor people in the world.3 About 433 million Indians (44 percent) lived on less than $1 a day in 1997 (World Development Indicators 2000). Official statistics classified roughly 36 percent of the population as poor in 1993-1994. Indian poverty is largely a rural phenomenon. About 75 percent of the poor reside in rural areas (World Bank 2001). Roughly 33 percent of rural residents were considered poor by the Government of India in 1991, as compared to 18 percent of urban residents (Drèze and Sen 1995). Table 1 presents information on urban and rural poverty in Andhra Pradesh and Orissa. Most locate the causes of rural poverty in slow agricultural growth rates, low factor productivity, and inequitable access to land and other inputs (Mearns 1999). Table 1: Poverty in Orissa and Andhra Pradesh. % of individuals who are Head count ratio of poverty # of Scheduled Scheduled Scheduled Scheduled All households Castes Tribes Castes Tribes Rural Andhra 4,908 19.3 9.5 27.7 43.8 41.2 Pradesh Urban Andhra 3,644 8.5 2.8 36.1 41.0 43.7 Pradesh Rural Orissa 3,338 18.5 25.2 51.9 57.2 76.9 Urban Orissa 1,037 13.1 11.9 39.7 45.5 61.6 Poverty rates are based on the official poverty line. This poverty line is state-specific and is derived separately for rural and urban areas. Source: Household level data, 50th round of NSS Consumer Expenditure Survey 1993-94 (Meenakshi, Ray, and Gupta 2000). Rural poverty is closely linked to land ownership and to social status. Approximately 84 percent of rural Indian households operate less than 2 hectares of land; the other 16 percent operate almost 66 percent of the land (See Table 2).4 Land may be distributed more inequitably than official figures suggest as some large landholders distributed formal ownership among family members to evade land ceilings. Many households own too little productive land to rely solely on its products for subsistence. However, those households that manage to secure a livelihood from their land are less likely to be poor than those dependent on agriculture wage labour (Agarwal 1994). There is little reason to expect a dramatic shift in land distribution in the short term. 3 The figures reported in this paragraph are not wholly consistent. Poverty figures depend on the measures used, the population sampled, and a host of other factors. There is an active debate on appropriate measures and poverty trends in India. 4 Of course, quantitative data on land ownership and operation tells us little of its quality; an acre of irrigated land and an acre of rain-fed land are not the same. 2 Section I: Land, livestock, and poverty in India, Andhra Pradesh and Orissa Table 2: Rural land ownership. Percentage distribution of households and area operated by size class of operational holdings India Andhra Pradesh Orissa Percent of Percent of Percent of Percent of Percent of Percent of households operated households operated households operated area area area Landless 21.8 - 37.5 - 27.2 - (0-.002 ha) Marginal 48.3 15.5 36.9 17.5 43.5 22.0 (.002-1 ha) Small (1-2 ha) 14.2 18.6 13.3 23.0 17.9 30.3 Semi-Medium 9.7 24.2 8.4 26.5 8.8 27.8 (2-4 ha) Medium (4-10 ha) 4.9 26.5 3.4 23.6 2.5 16.3 Large (>10 ha) 1.1 15.2 0.5 9.5 0.2 3.7 Source: 48th NSS Land and Livestock holdings survey, 1991-1992 (National Sample Survey Organisation. Department of Statistics. Government of India. 1997). Table 1 presents information on the relationship between social status and poverty. Low caste and out caste status continues to be correlated with poverty. The populations of Andhra Pradesh and Orissa comprise a substantial proportion of dalits (scheduled castes) and advivasis (scheduled tribes).5 Dalits are present in most districts, but adivasis are concentrated in the forest, mountainous, and remote areas. Much of the land in which adivasis reside is owned by the state, at least formally, or controlled by non-adivasis (Mohanty 1997). Thus, producers in these areas do not have full control over the land used for livestock production. The 1991 census listed 62 distinct adivasi groups in Orissa. Although the table does not provide data on nomadic communities, informants indicated that there are pastoralist and sedentarized communities in Andhra Pradesh. Pastoralists tend to possess a greater number of livestock per capita than other groups. Pastoralist communities often lack political influence, but they are not necessarily poor by standard measures (Agrawal 1999). For the most part, land ownership and social caste continue to serve as indicators of political influence or lack thereof. Despite increased mobilization by dalits and adivasis in recent decades, research in Andhra Pradesh and Orissa indicates that large land owners and upper caste individuals continue to exert disproportionate influence in local, district, and state level decisions (Reddy 1989; Manor 2000; Mohanty 1996). Poor rural livestock producers tend to own little arable land and often come from socially marginalized groups. Both land ownership and social caste are relevant to livestock production. The amount of land one owns affects one’s ability to support livestock. Those with ample private lands have greater crop residues and may be able to raise fodder crops. Most producers, however, depend partially or wholly on crop residues and common property resources—such as village pastures, tanks, and local forests. Jodha’s classic study found that 84 to 100 percent of poor households in dry regions were dependent 5 The terms Scheduled Caste and Scheduled Tribe are used to refer to those historically marginalized groups that are granted special protections in the Constitution. Scheduled castes refers to “untouchables” and scheduled tribes refers to “tribal” peoples. Dalit and adivasi are the terms contemporary representatives of these groups use most frequently. 3 Section I: Land, livestock, and poverty in India, Andhra Pradesh and Orissa on common property resources (CPRs) for food, fuel, fodder, and fibre while only 10 to 28 percent of large farmers gathered these items from common areas (Jodha 1986). Animal grazing in CPRs accounted for 69 to 89 percent of grazing for livestock owned by poor households and 11 to 42 percent of grazing from rich households. That study, and many others, also found that the quantity and quality of common lands has declined substantially since Independence. Social caste affects livestock production by constraining access to services and resources. Higher caste individuals are frequently unwilling to provide services to low/out-caste livestock producers because contact with “untouchables” is perceived to pollute oneself. However, out-caste individuals may provide services to higher caste individuals if they observe proper protocol. Ethnicity may also influence dietary practices and thus local markets. Informants indicated that adivasis in Orissa were generally non-vegetarian and consumed less milk than non-adivasis (Mittal et al. 1999). Thus, one would expect a stronger local market for meat in mostly adivasi areas. The potential for dairy would depend on access to nonlocal markets but should be lower than in milk-consuming areas. Historically, livestock were integrated into a mixed agricultural-livestock system. Livestock tilled fields, fed on crop residues, and fertilized the fields with their manure; and provided milk and meat for household consumption, celebrations, and religious festivals.6 As farmers have become more integrated into markets, sale of livestock products has come to comprise a significant share of household incomes. Kurup (2003) estimates that livestock comprises 30 percent of household income in Orissa; agricultural or wage income remains primary for most. Income from livestock can balance that from agriculture. Agricultural income is episodic and depends on a successful season. Dairy can provide regular income and meat animals provide a ready source of cash on demand. In 1999-2000, livestock comprised 5.5 percent of India’s gross domestic product (GDP).7 While this figure is dwarfed by the total contribution of agriculture (24.85 percent), livestock’s share in the agricultural GDP has grown slightly over time. The gross value of livestock sector output was about Rs. 130,234 crore; the GDP of the livestock GDP sector comprised Rs. 984 billion (roughly US$22.6 billion).8 Dairy products garner the greatest proportion of output value (64.6 percent); meat and meat products accounted for 18.5 percent of output value. Other outputs include dung (8.6 percent), eggs (3.3 percent) and hair or fibre products (8.6 percent). The majority of livestock products are consumed domestically. In 1999-2000 livestock export earnings were only Rs. 2,000 crore (US$460 million). Meat and meat products and leather and leather products comprise more than 90 percent of livestock sector exports. Analyses indicate that substantial reductions in international trade barriers and improvements in domestic processes (disease control, packaging, etc) would be required for India to gain a larger share of world markets (Sharma and Sharma 2002; Sharma and Gulati 2003). Small producers are unlikely to play a major role in production for export in the near term.9 As Tables 3-10 demonstrate, livestock ownership is distributed less inequitably than arable land. The majority of livestock are held by smallholders operating less than 2 hectares of land. Many landless households own some livestock. However, there is a 6 Sale of animal fibres (wool) and skin (leather) is not an important source of income in Andhra Pradesh and Orissa. 7 Sources: Website of the national Department of Animal Husbandry & Dairying (cited as GOI 2003b-d), Sharma and Sharma (2002), and GOI (2003a). This figure excludes animal (draught) power, which was valued at Rs. 4,000-9,500 crore (Government of India. Planning Commission 2002). Some experts believe this figure to be low. One crore = 10 million (10,000,000) 8 As of January 1, 2000, US$1 = Rs. 45.98. 9 Some dairy cooperatives, such as GCMMF market dairy products abroad. However, these sales comprise a small share of their total earnings. 4