Do cows have negative returns? The evidence revisited

Esther Gehrke*, Michael Grimm

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

This paper addresses the apparent paradox between widespread support of cattle farming through agricultural policy interventions and negative returns to cattle, as stressed in recent works. Using a representative panel data set for Andhra Pradesh, India, we explore the average and marginal profitability of holding cattle. We find that cattle farming might well generate positive returns, but most households seem to operate at unprofitable levels. Our results suggest that cattle farming is associated with sizable nonconvexities in the production technology and that substantial economies of scale, as well as high up-front expenses of acquiring high-productivity animals, might trap poorer households in low-productivity asset levels.

Original languageEnglish
Pages (from-to)673-707
Number of pages35
JournalEconomic Development and Cultural Change
Volume66
Issue number4
DOIs
Publication statusPublished - Jul 2018
Externally publishedYes

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