CONTEXT AND BACKGROUND
Though the livestock sector has grown by 3.2% in 2016, its contribution to GDP has fallen from 2.2% in 2008 to 1.7% in 2016 (GOB 2016). The contribution of this sector to the agriculture sector has been almost static at around 13% during the same period. This sector, therefore, is not growing as much as other sectors.
Meat consumption in Bangladesh has steadily increased from 11.6 gms/p/d in 1995 to 18.6 gms/p/d in 2010 (HIES 1995 and 2010). However, beef consumption has steadily fallen, from 8.3 gms/p/d in 2000 to 6.8 gms/p/d in 2010 – a fall by more than a fifth (21.8%). During this period consumption of chicken increased from 4.3 to11.2 gms/p/d -anincrease by 160%. Thus, growth in meat consumption in Bangladesh during 2000 and 2010 was driven by increased consumption of poultry meat while consumption of beef actually declined. The English newspaper Daily Star citing World Bank Commodities price data reports that beef in Bangladesh is 32 percent costlier than the global average. Consumers paid Tk. 480-510 or about $6 for each kg of beef in Dhaka in July 2017 when the global average price was $ 4.54 (about Tk. 366) per kg. Per capita milk consumption in Bangladesh is 18 kg per year which is significantly lower than other countries in the region. India and Pakistan consume 90 kg and 190 kg of milk per capita respectively . Deficiency in milk production is met by imported powder milk and in meat production by cattle smuggled into Bangladesh.
The debate over rate of return to raising livestock was unleashed by Anagol et al. (2017). They have found that the median return to cows was -7% without incorporating labour costs and a large number of Indian dairy animals generated negative returns. When labour costs were included, they found that more than half of the milking cows had negative returns. Anagol et al. (2017, p. 585) summarizes the debate by asking, “if cows and buffaloes earn such low, even negative, economic returns, why would rural Indian households continue to invest in them?” Anagol et al. (2017) discussed several factors that may explain negative returns. These include measurement error leading to underestimates of returns, preference for illiquid savings insurance, variation of returns over years, labour market failures, milk market failures and social, cultural, and religious values. Gehrke and Grimm (2017) showed that returns to livestock vary by quality of the cattle and size of the stock. Attanasio and Augsburg (2014) found that returns were positive in normal years and negative in drought years.
Given this context, we extend this debate by taking it to the Bangladesh context and try to answer three interrelated questions: i) who raises livestock? ii) what is the rate of return of raising livestock in Bangladesh? and iii) what explains the variations in the rates of return? Particularly, is rate of return positive or higher for the poor?
We will mainly use Bangladesh Integrated Household Survey (BIHS of International Food Policy Research Institute, IFPRI). There are several advantages of using this dataset. First, the sample is statistically representative at rural national and divisional levels. Second, BIHS conducted two rounds of survey in 2011 and 2015 on the same households. We combine them to create a household level panel data which will allow us to control for household level time-invariant heterogeneity. Third, the information on livestock is very extensive and adequate for carrying out the estimations. It contains information on livestock ownership (large/small ruminants and poultry), their current and last year’s values, revenues and costs etc. We will also use data from other sources such as the Household Income Expenditure Survey of Bangladesh.
Study Director/ Team Leader: Dr. Kazi Ali Toufique, Research Director, BIDS.
Study Member: Dr. Kazi Iqbal, Senior Research Fellow, BIDS.
Study Member: Mr. Wahid Ferdous Ibon, Research Associate, BIDS.
Sponsor: BIDS Research Endowment Fund.