Livestock farming may become less profitable: CEA on sale ban

The CEA said livestock farming will depend critically on the terminal value of assets

Amid raging debate over ban on sale of cattle for slaughter at animal markets, Chief Economic Advisor Arvind Subramanian has said that livestock farming could become less profitable if social policies drive what has to be done with unproductive cattle.

In his Foundation Day Lecture of National Academy of Agricultural Sciences, Subramanian said governments have the right to choose their social policies, "but in doing so they must be fully aware of the economic costs of these policies".

He said that if social policies impede the workings of the livestock market, the impact on the economics of livestock farming could be considerable. These costs must be factored in for appropriate choices to be made.

The CEA said it must be recognised that the economics of livestock farming, and hence the fate and future of this source of livelihood, will depend critically on the terminal value of assets, in this case the no-longer-productive livestock.

"If social policies drive this terminal value precipitously down, private returns could be affected in a manner that could make livestock farming less profitable," he said.

The declining terminal value arises both because of the loss of income from livestock as meat and the additional costs that will arise from having to maintain unproductive livestock, he said.

But there is more, he said, adding that "it is possible that social policies could affect social returns even more adversely. Stray cattle, and a lot of it, will have to be looked after, otherwise diseases (foot and mouth) could spread, leading to health hazards and social costs".

The lecture comes against the backdrop of government banning sale and purchase of cattle from animal markets for slaughter.