Vertical coordination in high-value commodities

"Rising per capita income, urbanization and globalization are changing the consumption basket in the developing countries towards high-value commodities (like fruits & vegetables, milk, meat, poultry, fish, etc.). This paper explores how smallholders can benefit from the emerging opportunities from a silent demand-driven changes in high-value agriculture in India. The study examines the institutional mechanisms adopted by different firms to integrate small producers of milk, broilers and vegetables in supply chain and their effects on producers' transaction costs and farm profitability. The study finds that the innovative institutional arrangements in the form of contract farming have considerably reduced transaction costs and improved market efficiency to benefit the smallholders. The study does not find any bias against smallholders in contract farming. Also, the study does not find that the relevant firms have exploited their monopsonistic position by paying lower prices to farmers. On the contrary, contract producers were found enjoying benefits of assured procurement of their produce and higher prices. The study lists policy hurdles in scaling up the innovative models of vertical coordination in high-value food commodities" Authors' AbstractHigh value commodities ,Urbanization ,High value agriculture ,Scaling up ,

Agricultural diversification in India and role of urbanization

Indian agriculture is diversifying during the last two decades towards High-Value Commodities (HVCs) i.e., fruits, vegetables, milk, meat, and fish products. The pace has been accelerated during the decade of 1990s. HVCs account for a large share in the total value of agricultural production. Supply and demand side factors coupled with infrastructural development and innovative institutions drive these changes. In this paper, the focus is on diversification towards HVCs in the context of urbanization. Group of urban districts (districts with >1.5 million urban population) have a higher share of HVCs compared to the urban-surrounded (near urban districts) and other districts (districts in the hinterland). Among the HVCs, vegetables and meat products have a higher share in urban districts compared to the other two groups. Milk production is more widespread due to excellent network of co-operatives and infrastructure facilities. Using GIS (geographic Information System) approach it was found that urban-surrounded districts with better road network connection to urban centers have been able to diversify towards HVC's to meet the demand in the urban centers. Model results further confirm these findings. Thus, urbanization is a strong demand side driver promoting HVCs. Since urban population is growing at more than 3% per annum, demand for HVCs will drive their production. The analysis has also brought out regional variations in HVCs across different districts in the country that has implications on regional development and planning, and consequently on public and private sector investment strategies.

Livestock in Mixed Farming Systems in South Asia

Animal production in South Asia is predominantly part of mixed crop-livestock farming systems vital for the security and survival of large numbers of poor people. In such systems, livestock generate cash income, provide draught power and manure, utilize crop residues and by-products making them partially, closed systems, and thus the most benign from the environmental perspective. Mixed farming systems however, are extremely complex and heterogeneous in terms of crops grown, livestock species raised and in their responses to development initiatives. Further, recent decades have seen significant changes in mixed systems in terms of livestock demography, increased commercialization (degree of integration with markets), etc. Factors contributing to this change include growing human population, mechanization of cultivation and rural transportation, use of inorganic fertilizers and government programs to promote animal production. On the demand side, an important factor contributing to the change has been the growing demand for livestock products (milk and meat) driven by income growth, urbanization and changes in tastes and preferences in the region. Meeting this growing demand is both an opportunity and a challenge for small-scale mixed crop-livestock farmers. Unlike in the past, productivity increases should contribute a larger share to output growth owing to increasing pressure on land and competing resources. Low productivity of livestock in mixed crop-livestock systems in South Asia is due to non-adoption of available technologies or their uptake has not been sustainable, because they were improperly targeted into the farming systems (for example, introducing cross-breeding technology in areas with poor feed resources, improved forage crops in low rainfall areas etc). To better understand the nature of small scale mixed farming systems in South Asia, the recognition of the strong nexus between crop and animal production, the striking variation in systems and the need for differential intervention, a Crop–Livestock Systems typology has been constructed that delineates the regions of each country into homogenous crop-livestock zones /systems with similar response to technology uptake and development initiatives. Thus, the typology would enable better targeting of technical and socio-economic interventions aimed at improving animal productivity and protecting the natural resource base on the farms in South Asia

Review on Raising Livestock Productivity in Crop-Livestock Systems in India: Challenges and Implications For Research

The kvorld's livestock production systems are divided into 3 broad categories, based on the degree of integration with crops and land -- grazing systems, mixed crop-livestock hrming systenls (MCLS) and industrial systems or landless systems (Sere and Stienfield 1996). Historically, at low population densities and land abundant scenario, crop and animal production are extensive/specialized and hence, croplivestock interaction is weak. However, as population density incrr:~ses, there is increasing pressure on cropland, with fallow and pastureland increasingly brought under cultivation. This, in turn, raises farmers' dependence on cropresidues. den~ar~fdor manure and animal traction. There is thus n ~~~too\vvacrd s crop-livestock interaction, where crops and animals are integrated on the same farms (McIntire er 111. 1992)..

Crop - Livestock Economies in the Semi - Arid Tropics Facts, Trends and Outlook

This report analyzes the structure and trends in the crop-livestock economies of developing countries falling wi thin the semi-arid tropics of the wor ld. Population growth, urbanization and increasing per capita incomes are fuelling rapid growth in the demand for animal-based foods in developing countries including those located in the semi-arid tropics. The rising demand for animal-based foods is likely to have several implications for livestock production systems (structure, production, productivity, intensification etc), the environment, markets, institutions and trade, and ultimately for livestock producers. We are thus witnessing a dualistic mode of development: a fast growing commercial sector that is coming up close to demand centers even as the traditional semi-subsistence sector continues to be the lifeline of many small and poor livestock keepers. In the commercial sector, the non-food functions of livestock (draught, transport, asset etc) are on the decline. The rising demand for animal-based food is also fuelling the derived demand for livestock feed, particularly crop residues in South Asia and SSA, and agro-industrial by-products in all regions of the SAT. The livestock sector is also under pressure to adjust to forces of market liberalization and globalization. Wi th distortions in the wor ld trading environment for livestock products and stiff SPS standards, the competitiveness of domestic dairy and meat production in SAT countries is under threat. The best option to remain competitive is through the adoption of improved technologies, investments in infrastructure to meet quality standards, domestic reforms, public-private sector partnerships particularly in the delivery of health services, innovative institutions and policies that link small-scale producers wi th markets/processors. Poverty is high in all SAT countries of SSA and South Asia. For a majority of the rural poor, livestock rearing is an important means of survival. The productivity of livestock is low owing to numerous constraints. Alleviating these constraints would help improve performance of livestock in SAT countries, which in turn would benefit millions of poor

Environmental value of dung in mixed crop-livestock systems

Dung is an important byproduct of livestock. It is used as manure, or is converted into dung cakes for use as fuel or mixed with clay for flooring and plastering of mud houses. Apart from these important uses of dung, it also has a great environmental value. Its contributions to environment could be positive as well as negative. From the negative side, methane emission from manure management is a negative environmental externality. The positive externality is the use of dung cake as domestic fuel, which can be seen as a substitution or replacement of the equivalent amount of thermal energy from fuel-wood or fossil-fuel. It is a great saving on fuel-wood by cutting down of standing forests and trees, and another is the saving of land that is required to produce replacement amount of fuel-wood for dung cake. In the present paper we have estimated the quantity of fuel-wood that would be required to replace dung-cake as domestic fuel, and the land area that would be required to produce or supply that amount of fuel-wood. At current feeding rates, India produces over 83 million tonnes of dry dung-cake, which is used annually by the rural households as domestic fuel for cooking and warming. If this amount of dung cake was to be replaced by fuel wood, the country will require producing an additional amount of 23.5 million tonnes of fuel-wood, and the additional land requirement for fuel-wood plantation will be about 2.35 million ha. From the perspective of food production, supposing that under traditional rainfed agriculture food grains yield ranges from 1.5 to 2 tonnes/ha, the land saved would produce 3.5 to 5 million tonnes of foodgrains

Greenhouse gases emission from livestock production system of India: An actual consumption approach

The present study was undertaken to quantify methane emission from livestock production system in India. The computational results showed that the total methane emission from the livestock production system at 2012 population base was 12.28 million tonne. In the total methane emission from enteric fermentation, share of cattle is marginally lower (60%) than its share in the bovine population (64%) while the share of buffalo (40%) is marginally higher than its share in the population (36%). Cattle adult male account for more than 35% of the emission while buffalo in-milk accounts for little more than 46.7% of the emission. Methane emission from manure management for 2012 livestock population was estimated to be 0.20 million tonne. Other livestock like goat, sheep, camel and horses emit around 7.5% of total methane emission from both the sources. The estimates of methane emission from Indian livestock will help the policy makers and environmentalist of the country in designing mitigation strategies

Agriculture, economic growth and Regional disparities in India

This paper investigates the process of convergence and catching-up among major Indian states during 1980/81–2004/05—a period of economic liberalisation and accelerated economic growth, and also analyses the factors that enhance economic growth and lead states towards an identical steady state. In particular, we examine the role of agricultural conditions in this process. Results indicate absolute divergence in income levels across states. However, after controlling for structural characteristics of states there is a strong tendency of convergence among states. Physical infrastructure and human capital are found to enhance economic growth, but alone are not sufficient for convergence. For convergence, the investment in physical infrastructure and human resources should be accompanied by a reduction in employment pressure on agriculture by improving labour market linkages of agriculture with non-agricultural sectors, and by promoting growth-enhancing labour-intensive agricultural technologie

Agricultural Diversification in India

The dietary mix and its flavour are changing fast on the plate of Indian consumers. For more than two decades, India has registered a growth rate of 5 to 6 per cent per annum in GDP. With declining growth rate in population, the per capita income has grown by about 3.5 per cent per annum over this long period. This sustained growth is shifting the consumption patterns in the economy, away from basic staples and inching towards high-value agricultural products such as fruits and vegetables, and dairy, poultry and fishery products. The interesting feature of this change is that it is happening in the lower income brackets....

Strengthening Pluralistic Agricultural Information Delivery Systems in India

The study on agricultural information flow has revealed that only 40 per cent farm households access information from one or the other source. The popular information sources among farmers have been reported to be fellow progressive farmers and input dealers, followed by mass media. The public extension system has been found to be accessed by only 5.7 per cent households. Only 4.8 per cent of the small farmers have access to public extension workers as compared to 12.4 per cent of large farmers. The sector-wise study on the type of information, sought has revealed that a majority of the farmers have sought information on seed (32–55%) in the cultivation sector; on health care (26–54%) in animal husbandry; and on management and marketing (8–46%) in fisheries. Regarding adoption of information by farmers, input dealers and other progressive farmers have depicted greater influence mainly due to easy and convenient access to these sources. The study has suggested promotion of farmers-led extension and strengthening of public extension services to improve coverage and efficiency of agricultural information delivery systems