Dairying and Whole-farm Economics of Crop-livestock Farming Systems: Comparing Arid and Irrigated Districts of Punjab, Pakistan

Research output: Contribution to journalArticle

13 Downloads (Pure)

Abstract

Dairying is an important component of Pakistan’s mixed crop-livestock farming systems. The national economy engages some 8.8 million small-scale producer households. The country produces more milk than any other except for the United States and India. Yet little is known about small-scale producer microeconomics to inform policy development for improving their welfare. In this paper we aim to identify the whole farm profitability of small agricultural households, with a specific focus on milk production. We compare two contrasting agro-ecological regions within Pakistan’s Punjab (irrigated Okara and rain-fed Bhakkar) using results for a single 2008-09 fiscal year of production for 212 farms.

Net farm profits, taking long-run opportunity costs of labour and capital into account, showed only 10 percent of these farms to be profitable in either district, though short-run profits, accounting for cash costs only, showed positive whole farm gross margins for 90 percent and 80 percent of farms in Okara and Bhakkar, respectively. The returns on assets (at 2.78 percent and 0.53 percent for the two districts) was lower than the national average return on savings (9 percent). For dairy enterprises, total costs were higher than incomes; so many farms (70 percent and 60 percent, respectively) were assessed as making losses. Given the low opportunity costs of feeds (often crop residues) and of labour (6.2 percent unemployment) and the high rate of inflation (11.8 percent), returns on factors of production including labour and capital, may not be lower than international standards. There is a need, however, to raise the dairy industry’s overall productivity to make dairying viable; and to identify an optimal land and livestock combination that is profitable and commercially viable.
Original languageEnglish
Article numberG
Pages (from-to)1-18
Number of pages18
JournalAFBM Journal
Volume15
Issue numberPaper G
Publication statusPublished - 2018

Fingerprint

Pakistan
milk production
livestock
farming systems
economics
farms
crops
labor
opportunity costs
profits and margins
households
dairies
cash costs
microeconomics
farm profitability
unemployment
agroecological zones
development policy
inflation
assets

Cite this

@article{4a78f88b75b34b498b524f763ecc5719,
title = "Dairying and Whole-farm Economics of Crop-livestock Farming Systems: Comparing Arid and Irrigated Districts of Punjab, Pakistan",
abstract = "Dairying is an important component of Pakistan’s mixed crop-livestock farming systems. The national economy engages some 8.8 million small-scale producer households. The country produces more milk than any other except for the United States and India. Yet little is known about small-scale producer microeconomics to inform policy development for improving their welfare. In this paper we aim to identify the whole farm profitability of small agricultural households, with a specific focus on milk production. We compare two contrasting agro-ecological regions within Pakistan’s Punjab (irrigated Okara and rain-fed Bhakkar) using results for a single 2008-09 fiscal year of production for 212 farms.Net farm profits, taking long-run opportunity costs of labour and capital into account, showed only 10 percent of these farms to be profitable in either district, though short-run profits, accounting for cash costs only, showed positive whole farm gross margins for 90 percent and 80 percent of farms in Okara and Bhakkar, respectively. The returns on assets (at 2.78 percent and 0.53 percent for the two districts) was lower than the national average return on savings (9 percent). For dairy enterprises, total costs were higher than incomes; so many farms (70 percent and 60 percent, respectively) were assessed as making losses. Given the low opportunity costs of feeds (often crop residues) and of labour (6.2 percent unemployment) and the high rate of inflation (11.8 percent), returns on factors of production including labour and capital, may not be lower than international standards. There is a need, however, to raise the dairy industry’s overall productivity to make dairying viable; and to identify an optimal land and livestock combination that is profitable and commercially viable.",
keywords = "Gross margins, whole farm profitability, smallholder, agriculture, crop-livestock, farming system, Dairy, Pakistan",
author = "Sosheel Godfrey and Karl Behrendt and Thomas Nordblom and Peter Wynn and Ann Cowling and David McGill and Hassan Warriach",
year = "2018",
language = "English",
volume = "15",
pages = "1--18",
journal = "AFBM Journal",
issn = "1449-5937",
number = "Paper G",

}

TY - JOUR

T1 - Dairying and Whole-farm Economics of Crop-livestock Farming Systems

T2 - Comparing Arid and Irrigated Districts of Punjab, Pakistan

AU - Godfrey, Sosheel

AU - Behrendt, Karl

AU - Nordblom, Thomas

AU - Wynn, Peter

AU - Cowling, Ann

AU - McGill, David

AU - Warriach, Hassan

PY - 2018

Y1 - 2018

N2 - Dairying is an important component of Pakistan’s mixed crop-livestock farming systems. The national economy engages some 8.8 million small-scale producer households. The country produces more milk than any other except for the United States and India. Yet little is known about small-scale producer microeconomics to inform policy development for improving their welfare. In this paper we aim to identify the whole farm profitability of small agricultural households, with a specific focus on milk production. We compare two contrasting agro-ecological regions within Pakistan’s Punjab (irrigated Okara and rain-fed Bhakkar) using results for a single 2008-09 fiscal year of production for 212 farms.Net farm profits, taking long-run opportunity costs of labour and capital into account, showed only 10 percent of these farms to be profitable in either district, though short-run profits, accounting for cash costs only, showed positive whole farm gross margins for 90 percent and 80 percent of farms in Okara and Bhakkar, respectively. The returns on assets (at 2.78 percent and 0.53 percent for the two districts) was lower than the national average return on savings (9 percent). For dairy enterprises, total costs were higher than incomes; so many farms (70 percent and 60 percent, respectively) were assessed as making losses. Given the low opportunity costs of feeds (often crop residues) and of labour (6.2 percent unemployment) and the high rate of inflation (11.8 percent), returns on factors of production including labour and capital, may not be lower than international standards. There is a need, however, to raise the dairy industry’s overall productivity to make dairying viable; and to identify an optimal land and livestock combination that is profitable and commercially viable.

AB - Dairying is an important component of Pakistan’s mixed crop-livestock farming systems. The national economy engages some 8.8 million small-scale producer households. The country produces more milk than any other except for the United States and India. Yet little is known about small-scale producer microeconomics to inform policy development for improving their welfare. In this paper we aim to identify the whole farm profitability of small agricultural households, with a specific focus on milk production. We compare two contrasting agro-ecological regions within Pakistan’s Punjab (irrigated Okara and rain-fed Bhakkar) using results for a single 2008-09 fiscal year of production for 212 farms.Net farm profits, taking long-run opportunity costs of labour and capital into account, showed only 10 percent of these farms to be profitable in either district, though short-run profits, accounting for cash costs only, showed positive whole farm gross margins for 90 percent and 80 percent of farms in Okara and Bhakkar, respectively. The returns on assets (at 2.78 percent and 0.53 percent for the two districts) was lower than the national average return on savings (9 percent). For dairy enterprises, total costs were higher than incomes; so many farms (70 percent and 60 percent, respectively) were assessed as making losses. Given the low opportunity costs of feeds (often crop residues) and of labour (6.2 percent unemployment) and the high rate of inflation (11.8 percent), returns on factors of production including labour and capital, may not be lower than international standards. There is a need, however, to raise the dairy industry’s overall productivity to make dairying viable; and to identify an optimal land and livestock combination that is profitable and commercially viable.

KW - Gross margins

KW - whole farm profitability

KW - smallholder

KW - agriculture

KW - crop-livestock

KW - farming system

KW - Dairy

KW - Pakistan

M3 - Article

VL - 15

SP - 1

EP - 18

JO - AFBM Journal

JF - AFBM Journal

SN - 1449-5937

IS - Paper G

M1 - G

ER -