Holy Cows or Cash Cows

Owning a Cow  in India is not only about religion

 

  • Cows can be valuable economic assets to the rural poor
  • The animal is not merely a symbol of religious sanctity in India
  • The financial returns of owning livestock depend to a “large extent on weather conditions” of a region

It is generally believed that in India cows are reared not particularly for their economic value but rather for the religious sanctity associated with the animal in the country.This conclusion was also arrived at by a team of researchers in a paper published in 2013 (*Anagol, Etang and Karlan -2013), which showed that rearing livestock has negative returns.



Orazio Attanasio & Britta Augsburg**, challenge the above assumption in their research,“Holy cows or cash cows? The economic return to livestock in rural India.”

The researchers explain the simple and interesting economy behind owning livestock with focus on cows and buffaloes by farmers in rural India, assessing and highlighting the pros and cons of such an ownership in the context of different variables like changing weather, milk production, household income etc.

Their report is based on three years of data collected  from  the district of Anantapur(Andhra Pradesh) and shows that in one of the three years returns on cow were very high due to favorable weather conditions while other two were drought years so, naturally, the returns were meager.

Extensive Survey

The district of Anantapur is the largest of the 23 districts of Andhra Pradesh, in South India and lies in an area, which is characterized by scarce rainfall, poor soil conditions and frequent droughts.

A total of 1,041 households were selected in 2008 and an extensive survey collected information on a wide range of variables.The same households were contacted again in 2009. Of the original 1041 households, 951 were re-interviewed with very similar survey instruments. A final survey was conducted in 2012 in which 885 households could be re-interviewed.

TABLE – 1 : Animals owned by House holds

Holy Cows or Cash Cows

Summary statistics for the three surveys have been presented in Table 1. Of the household surveyed, 61% owns livestock in 2008. This percentage goes down to 43% in 2009 and to 36% in 2012. Conditional on ownership of livestock, over 90% of households owns a female animal, to be used for the production of milk, which is either sold, consumed within the household, or, typically, both.

Revenues 

The revenues a poor household gets from owning a cow come mainly from three sources:

  1. Quantity of Milk produced –which is either sold or consumed within the household.
  2. Calves that are born following the insemination of the animal -in many cases, the farmers do not realize any revenue from the sale of the calves, but in some cases they do.
  3. Sale of dung – used as fuel.

 Costs

1- The main source of costs is fodder.

2- Health costs, which include the cost of insemination.

3- Additional costs the household incurs from the animal falling hill (and possibly dying). It is not common in other part of country.

4- The final cost component relates to labour cost.

Table -2 

Holy Cows or Cash Cows

Note: Columns (1)-(3) report our computations for the average rate of returns on holding cows, column (4) reports figures of AEK.The first panel of the tables refers to revenues and to the value of the animals; the second to revenues and the third the cost and the third to the rate of return. The last two panels report rates of returns, first using only our data and assumptions and then using information on appreciation/depreciation and labour costs from AEK. All values are adjusted for inflation, using 2008 as the base year

What makes these years so different?

As the table2 shows, 2008 was the only year of positive returns(88%) while the other two show negative returns with as low as  -74% in 2009 and -57% in 2012 when labor costs were excluded.

The reason  is that Anantapur is too dependent on rain:  2008 was a year of abundant rain at the right time of the year, while 2009 was officially declared a year of drought and also 2012 faced large challenges due to below average rain spells. In such drought years fodder is scarce and expensive, cows do not eat much and, as a consequence, produce less milk over a shorter period. Also insemination becomes more difficult, which reduces the likelihood of any milk production, and animals are more prone to diseases and death. The result is a negative  (and in the long run unsustainable) return!

Conclusions

The researchers conclude by stating that their paper does not prove that the behaviour of Indian farmers about holding livestock is perfect. Neither has it meant that cows may not be held for many other reasons like cultural and religious factors, as well as more complex economic incentives related to different types of trade. But the economic return can also be a good reason to own a cow.

**Prof Orazio Attanasio is Research Director & Dr Britta Augsburg is a Senior Research Economist at  The Institute for Fiscal Studies, London.