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3.2 Impact on Social and Equity Outcomes: Changes in Asset Base at the Low End of Livestock Farm Sizes and Incomes


Thailand provides a particularly interesting forum to explore the impact of modern large-scale livestock farming on smallholders because of its success with large-scale production of broilers for export and rich secondary sources on livestock farming, particularly the agricultural census and inter-censal surveys. The latter for 1993 and 1998, respectively, show that the number of small livestock farms, which include the backyard farms, has declined (see Table 3.1)[8]. Although there are no official statistics on backyard farmers in Thailand, casual observation suggests that their significance to the economy in terms of livestock production has also significantly decreased. Backyard livestock farms are only commonly found these days in the remote rural areas, where the transaction costs of market access in and out are still high.

All this does not necessarily mean increased poverty for the smallholders. First, today's large farmer in Thailand may have been a smallholder twenty years ago, and many in the dynamic Central region (where livestock production is concentrated) were. Second, the fact that small farms have exited from the sector may just mean that they found something even better to do in either high-value agriculture or non-farm work.

Available information from secondary sources in Thailand indicates the percentage of poor livestock households has not only declined proportionately more than the percentage of poor agricultural households overall (Table 3.2; and Poapongsakorn et al., 2003). Moreover, the Gini coefficient for livestock farmers is also much lower than the Gini for agriculture as a whole (Ibid.). This indicates that income distribution among the livestock-keeping households is relatively more equitable[9].

Using the 1993 Agricultural Census and Inter-censal Survey of Agriculture in 1998, Annex IV shows that there is no evidence that the scaling-up of livestock production in Thailand is a zero-sum game. In fact, Table 3.3 shows that the average income of livestock households increased between 1993 and 1998, despite the fact that 1998 was the year of economic depression when the GDP growth rate was negative 8 percent. For specialized livestock enterprises, the farms with the highest growth of income in this period were the smallest ones in terms of land size; farms on less than one hectare of land saw their real livestock incomes in 1994 domestic prices grow at 6 percent per annum. Among mixed cropping farms, the highest growth of income (5.7 percent per annum) was for farms in the 1.6 to 6.2 hectare range.

In the Philippines, historical time series data are more reliable for hogs than for the other livestock commodities, at least when broken down by size class. As shown in Figure 3.1, and confirming the discussion in the previous chapter, hog production has grown on both backyard and large-scale commercial farms at a national level. However, in proximity to Manila, the large-scale farms have overtaken the backyard farms, and are competing with each other for market share. Large-scale layer farms have already completely displaced smallholders, and large-scale broiler operations are starting to do the same.

Although data is only now beginning to be gathered systematically on the characteristics and dynamics of smallholder swine and poultry farming in the Philippines, it is clear that there has been significant market entry into smallholder hog raising over the past 15 years, particularly around major urban markets. Access to investment capital has been key. The typical smallholder operation in Southern Luzon is run either by a wife of a wage-earner or a retired person, providing an extra income source for someone who spends most of the day at home.

Three decades ago in India, when egg production was 10 billion and broiler production only 30 million per annum, the total employment numbers in the poultry sector were not very impressive. As income and employment in the crop sector started diminishing, the non-crop sector, which includes dairy and poultry, underwent a significant shift. With the demand for poultry products increasing and production reaching 37 billion eggs and 1 billion broilers produced per annum, this sector now employs around 1.6 million people (Mehta et.al., 2003). At least 80 percent of employment in the poultry sector is generated directly by production, while 20 percent is generated by dependent industries such as feed, pharmaceuticals, equipment and other services required by the poultry sector. Both production and services tend to be located in peri-urban and rural areas close to cities. Thus even in cases where the scaling-up industry is relatively new to the country and methods are highly modern, the production side-impact on incomes (and poverty reduction) of such a fast growing non-land intensive sector can be quite high.

Unlike the case of poultry, which was a private sector response to a market opportunity, Indian policy makers have long seen development of the dairy sector as a measure to create supplementary employment and income among small and marginal farming households and landless wage-earners. Milk production in India is a traditional activity rooted in the culture of the country, and takes place on millions of rural homesteads scattered across the country. As in many countries, dairying in India is a supplementary enterprise to crop farming and highly integrated with the crop production sector. Crop residues are used to feed animals, and animal manure is used in the fields as organic manure and as a fuel in rural areas.

Milk production in India is thus a low-input, low-output farm activity within a smallholder (or even small-scale landless) production system, with about three-quarters of rural households owning two to three milk animals. Operation Flood in the western part of the country has been the cradle of the cooperative-led smallholder dairy expansion since the 1970s. Even so, one study showed that the scale of milk production had not changed significantly in the Operation Flood areas between 1988-89 and 1995-96 (see Sharma et.al., 2003). In fact, the average milk animal holding size has remained more or less the same in all zones (South, East, and West) during this period except for the North, where the proportion of households having four or more milk animals increased from 24 percent in 1988/89 to about 30 percent in 1995/96. On the other hand, in the East, the proportion of households having at least one animal increased from 45 percent in 1988/89 to 60 percent in 1995/96. At the national level, the distribution remained almost the same between 1986/87 and 1991/92 (Table 3.4).

Dairy animals feed largely on the crop residues/crop by-products and in return contribute dung for fuel and fertilizer, and farm power for crop production. Livestock holdings in general, and milk animal holdings in particular, appear to be far less inequitable than land holdings in rural India. Marginal and small farmers together owned about 60 percent of female cattle and nearly 54 percent of female buffaloes in 1986/87. Their share in 1991/92 remained the same in the case of cattle, while for buffalo it increased to about 58.5 percent. In contrast, the share belonging to large farmers fell during the same period (Table 3.4). The Gini coefficient representing the index of inequity in ownership of dairy stock indicates a perceptible decline, from 0.43 in 1961 to 0.37 in 1971 and further to 0.28 in 1991. This suggests that over time in India, the asset distribution of dairy cows has become significantly more equitable, starting from a fairly equitable base to begin with, at least compared to countries such as Brazil.

Table 3.1 Farm size in Thailand by type of animal

Number of swine in holding

Percentage Share in no. of pigs

Percentage Share in Number of holding

1978

1988

1993

1998

1978

1988

1993

1998

1 - 4

n.a.

n.a.

25.26

10.07

79.35

80.15

21.16

60.66

5 - 19

n.a.

n.a.

29.89

22.34

17.83

16.46

39.52

30.10

20 - 49

n.a.

n.a.

20.80

16.72

2.29

2.51

25.50

7.29

50 - 99

n.a.

n.a.

8.28

4.24

0.35

0.54

8.60

0.82

100 and over

n.a.

n.a.

15.82

46.63

0.18

0.34

5.22

1.13

Total (percent)

n.a.

n.a.

100.00

100.00

100.00

100.00

100.00

100.00

Total (no. of pigs & farmers)

5,314,000

4,684,926

6,182,953

5,731,360

1,263,000

778,113

590,616

465,509

Number of Dairy Cows in holding

Percentage Share in no. of dairy cow

Percentage Share in Number of holding

1978

1988

1993

1998

1978

1988

1993

1998

1 - 4

n.a.

n.a.

9.21

5.76

n.a.

54.73

11.88

34.67

5 - 19

n.a.

n.a.

44.04

48.90

n.a.

39.85

39.15

49.56

20 - 49

n.a.

n.a.

26.66

34.90

n.a.

4.53

31.42

15.07

50 and over

n.a.

n.a.

20.09

10.44

n.a.

0.89

17.54

0.69

Total (percent)

n.a.

n.a.

100.00

100.00

n.a.

100.00

100.00

100.00

Total (no.of dairy cows &farmers)

n.a.

93,654

257,895

240,206

n.a.

15,966

11,616

21,540

Number of chickens in holding

Percentage Share in Number of chickens

Percentage Share in Number of holdings

1978

1988

1993

1998

1978

1988

1993

1998

1-19

n.a.

n.a.

9.15

10.15

69.30

69.77

64.24

61.35

20-99

n.a.

n.a.

16.91

20.15

30.00

29.11

33.00

36.09

100-499

n.a.

n.a.

4.80

4.96

0.53

0.84

2.03

1.99

500-999

n.a.

n.a.

1.54

1.00

0.05


0.15

0.08

1,000-9,999

n.a.

n.a.

29.11

31.16

0.09

0.28

0.50

0.42

10,000 and over

n.a.

n.a.

38.49

32.58

0.03


0.09

0.06

Total (percent)

n.a.

n.a.

100.00

100.00

100.00

100.00

100.00

100.00

Total (no. of chickens & farms)

54,157,000

86,679,292

154,921,930

169,102,499

2,638,000

3,249,177

2,617,412

3,174,410

Sources:

1). Poapongsakorn, N. et. al., Annex IV, citing 1988 Inter-censal survey of agriculture by the National Statistical Office


2). 1993 Agricultural survey by the National Statistical Office


3). 1998 Inter-censal survey of agriculture by the National Statistical Office

Table 3.2 Livestock households, agricultural households and their farm income

Year

% of households

% of household income

Gini coefficient ratio

agriculture households

livestock households

poor agriculture households

poor livestock households

livestock

poor livestock

poor.

farm income

farm income

farm income

farm income

all

agriculture

livestock

agriculture

livestock

agriculture

total income

total income

total income

total income

households

households

households

1986

0.4

30.0

46.3

21.8

9.4

19.6

12.3

0.50

0.32

0.19

1988

0.6

33.8

41.2

31.6

26.0

23.6

23.7

0.49

0.34

0.57

1990

0.6

19.8

34.1

36.2

29.7

22.6

19.9

0.51

0.34

0.31

1992

1.0

18.4

31.6

26.4

12.4

17.8

11.1

0.54

0.33

0.21

1994

0.4

2.0

25.1

20.9

5.6

12.1

0.0

0.52

0.34

0.13

1996

0.5

13.9

17.4

23.2

8.5

11.4

0.4

0.52

0.35

0.25

1998

0.5

5.7

17.3

26.1

16.2

9.2

0.0

0.51

0.36

0.22

1999

0.6

-

23.1

26.9

19.6

17.7

-

0.53

0.36

0.18

2000

1.4

1.4

22.7

50.2

58.6

12.5

8.3

0.53

0.37

0.52

Note: 1986-99 definition of livestock occupation is livestock workers, dairy farm workers and poultry farm workers 2000 definition livestock occupation is market-oriented animal producers and related workers

Source: Poapongsakorn, N. et.al., Annex IV, calculated from National Statistical Office, Socio-economic Survey data tape

Table 3.3 Household income from agricultural produce and number of farm holdings (in current and 1994 baht)


Average income at current price

Average income at 1994 price

Growth rate

1993

1998

1993

1998

%

(a) Household income by farm area






Holders rearing livestock only

204,747

289,345

215,524

227,831

1.1

Under 6 rais*

21,545

39,552

22,679

31,143

6.3

6-9

31,149

39,601

32,788

31,182

-1.0

10-39

33,265

47,529

35,016

37,424

1.3

40-139

51,828

65,329

54,555

51,440

-1.2

140 and over

66,961

97,334

70,485

76,641

1.7

Holders growing crop and rearing livestock

162,193

225,512

170,729

177,569

0.8

Under 6 rais*

13,542

18,675

14,254

14,704

0.6

6-9

14,332

20,877

15,086

16,439

1.7

10-39

20,059

35,634

21,115

28,058

5.7

40-139

39,035

61,442

41,089

48,380

3.3

140 and over

75,225

88,884

79,184

69,987

-2.5

(b) Number of holdings by annual income






Holders rearing livestock only

1993

1998




under 5001 baht

4.7

1.1




5,001-10,000

9.2

2.8




10,001-20,000

13.7

8.3




20,001-50,000

27.1

15.6




50,001-100,000

24.4

33.0




100,001 and over

21.0

39.2




Total

100

100




Holders growing crop and rearing livestock






under 5001 baht

3.6

0.8




5,001-10,000

9.9

3.7




10,001-20,000

18.0

10.7




20,001-50,000

36.5

35.9




50,001-100,000

21.0

31.3




100,001 and over

11.0

17.6




Total

100

100




Source: Poapongsakorn, N. et.al., Annex IV, citing (1) National Statistical Office, 1993 Agricultural Census, and (2) National Statistical Office, 1998 Inter-censal Survey of Agriculture

Note: * One hectare is 6.25 rais; in 1998, US$ 1 averaged about 36.6 baht; in 1993 it was about 25.6 baht

Figure 3.1a Commercial and backyard hog inventories, Philippines, 1980-2001

Source: Costales, A., et. al., Annex I

Figure 3.1b Growth of commercial and backyard inventories in hog farms in Central Luzon, 1985-2001

Source: Costales, A., et. al., Annex I

Table 3.4 Changes in average number of bovines per farms of different sizes in India: 1986-87 and 1991-92 (average no. of animals per farm)

Farm Land Size

Cattle

Buffalo

Male

Female

Male

Female

1986-87

1991-92

1986-87

1991-92

1986-87

1991-92

1986-87

1991-92

Marginal

0.72

0.68

0.59

0.65

0.18

0.15

0.36

0.43

Small

1.49

1.58

1.07

1.29

0.30

0.30

0.71

0.90

Small-Med.

1.92

1.83

1.49

1.56

0.44

0.38

1.05

1.18

Medium

2.64

2.20

2.14

1.91

0.60

0.48

1.76

1.54

Large

3.58

2.45

3.42

2.45

0.76

0.57

2.41

1.93

All

1.20

1.16

0.95

1.03

0.28

0.25

0.65

0.74

Source: Sharma, V.P. et. al., Annex III

The dairy production sector in India is gender-friendly. It provides supplementary income to over 70 percent of rural households, and women carry out over 90 percent of the activities related to care and management of dairy animals. Milk production contributes on average 27 percent of the household income; its contribution varies from about 19 percent in the case of large farmers to about 53 percent in the landless category (Sharma et.al., 2003). Milk is also an important source of nutrition in rural areas thanks to its easy availability and the vegetarian diet of most of the population.

Changes may soon occur in this picture of dairy in India. As a part of domestic economic reforms and commitments to the WTO, the private processing portion of the Indian dairy sector was liberalized in a phased manner, starting with partial opening-up in 1991; in March 2002, the government removed all restrictions on setting up large-scale private-sector milk-processing capacity in milksheds previously reserved for procurement by cooperative dairies and small-scale informal milk traders. It is too soon to tell how this will impact small farmers. On the one hand, only 11 percent of milk is currently handled through the cooperative sector. Yet the impact of deregulation on the cooperatives is still to be seen, as is how the rise of private dairy processors will affect procurement patterns.

In Brazil, the most noticeable recent impact of the scaling-up of livestock production has also been in the dairy sector. There is a shrinking in the total number of Brazilian producers due to a higher competition with imported milk and new chilling requirements imposed by processors following liberalization of cooperative regulation and pricing in the 1990s. In 2000, there were 123,000 milk producers in Brazil, producing 6 million liters delivered to the 15 largest processors. Two years later, the number of producers had shrunk to 95,000, producing the same total volume of milk (Camargo Barros et.al., 2003). Casual observation also suggests that many small-scale swine farms exited the livestock sector in the South after the establishment of increased sanitary controls in the mid 1990s, in connection with the control of Foot-and-Mouth (FMD) disease.

Statistics on changes in the distribution of livestock farms in Brazil by size category are not available. The Agricultural Census, however, provides a comparable time series on the farming sector as a whole. Table 3.5 shows that the share of rural population active in agriculture fell from 77 percent to 69 percent between 1980/81 and 1996/97. Furthermore, more than three-quarters of Brazil's total population lives in urban areas, and that share is increasing. With only 15 percent or so of the workforce engaged in agriculture, and a lesser share in livestock raising, the poverty impact of events in the livestock sector in Brazil will be different from Asian developing countries, where smallholder agriculture continues to account for a much higher share of livelihoods in terms of the share of the population affected as producers. As will be seen below, one impact of the scaling-up of livestock production has been to lower meat and milk prices and thereby to increase access for the non-producing poor.

Table 3.5 Share of size class in all farms and share of rural population in agriculture in Brazil: 1980/81 and 1996/97

Year

Item

Less than 10 ha

10 to less than 100 ha

More than 100 ha

1980/81

% of Farms

45%

45%

10%

% of Economically Active Rural Population in Agriculture

77%



1996/97

% of Farms

49%

39%

21%

% of Economically Active Rural Population in Agriculture

69%



Source: Census of Agriculture, cited in Camargo Barros, G.S., et. al., Annex V.


[8] The section on Thailand, and especially the Tables, draws on Poapongsakorn et.al., 2003, which discusses original sources.
[9] A Gini coefficent is tantamount to a cumulative average of income inequality by class, where a perfectly equal distribution across classes would yield a Gini of 0 and a perfectly unequal distribution would score 1.

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