The impact of the foot and mouth disease control pathway on milk production in India
India has decided to invest in eradicating foot and mouth disease (FMD). If successful, this investment would increase milk production. In the past, gains in milk production from Operation Flood Programs I, II, and III, a growing national milk animal population, as well as the eradication of rinderpest have resulted in increases in per capita milk production. In this context, the effects on producers and consumers of declining FMD as the result of an FMD control program were investigated. The objectives set forth were to evaluate whether potential benefits from the FMD control program outweigh the expenditure on the program, how a delay in the program implementation would affect the results, and how the impacts of the program would be distributed among producers and consumers. A model was developed that simulates fluid milk production and demand in India. This was a dynamic partial equilibrium model with endogenous milk prices and production. Dairy herd dynamics were modeled to obtain milk price and calf crop elasticities. A differential form version of the model was then used to evaluate three FMD control scenarios in comparison to a projection of the OECD agricultural outlook forecast to 2050. It was found that a control program for FMD in India results in 8–11% lower milk prices. This benefits consumers but leads to lower revenue for the fluid milk production sector. Consumer surplus increases 4–6% due to lower prices and increased per capita milk production resulting from the control program. Rural consumers have a higher change in consumer surplus than urban consumers. For rural consumers it is 8–11% higher while urban consumers see an increase of 3–5% in consumer surplus. FMD causes a 17–30% reduction in income from milk producing animals. With an FMD control program, individual farms are better off as the risk of loss from FMD impacts decreases. Owners of crossbred cattle benefit more than owners of buffaloes or indigenous cattle due to the higher yields and value of milk produced from crossbred cattle.
Paarlberg, Purdue University.
Agricultural economics|South Asian Studies
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