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Psychologists believe that counting sheep is a neat trick to cure insomnia. But counting the cattle in Pakistan may lead to sleepless nights for the ruling class. That’s at least the findings of Punjab Livestock Census 2018, which indicates that the livestock population and its output may have stagnated over past 20 years, if not altogether shrinking!

That sentiment is echoed by several commentators and subject specialists, who point to increasing trends of calf-culling, selling of heifers for slaughter, and falling skin/hides availability as proof that livestock output – specifically, cattle and buffalo stock – may be declining. Afterall, over the past decade increase in consumer price levels for dairy (fresh milk) and beef (red meat) products, has remained consistently one of the highest in SPI food basket. But if livestock output is truly shrinking, how does the agriculture GDP – where livestock has 60 percent share - manage to show decent growth year after year?

Short answer? Pakistan’s statistical gatekeepers have a long and esteemed tradition of counting livestock population every 10 years through a census, and then applying annualized inter-census growth rate to estimate livestock population and economic output (dairy and beef) for years in between. Somehow, that has worked out for the country, as it has never had to take a significant downward revision in cattle count. In fact, out of the three census conducted in 1986, 1996, and 2006 two resulted in significant upward revision in base year animal population and economic output.

The statistical gimmicks during the inter-census period would be little bother if the census were undertaken regularly every 10 years. Unfortunately, national census is overdue since 2016; so, in absence of more recent data, the enumerators at National Accounts Committee have been using the growth rate from last century to estimate livestock output. As a result, livestock GDP exceeds economic contribution by Large Scale Manufacturing segment; and, if it continues to grow at the same rate, may soon oversize all of Manufacturing sector!

But before current administration is taken to task, let’s remember that in a country where population census (for humans) was delayed by 10 years, timely counting of livestock may be asking for too much. However, reports suggest that the government has decided to undertake GDP rebasing exercise, which in absence of fresh livestock census, may prove to be a grievous mistake. Why?

Given that official publications from provincial governments already contest reported size of livestock, using outdated growth estimates would hurt the credibility of the GDP rebasing exercise. Two, once rebasing is in place, political incentive to conduct a fresh Livestock Census would temper, as it may reduce the size of future reported economic growth. Three, as long as output estimates reflect that the livestock sector is doing well, subsequent regimes will have little impetus to bring reforms for market development.

But there is also a political flipside to conducting a census exercise prior to rebasing. Analysis of historic trends in retail prices (12-month average) of livestock products – fresh milk and beef – as reported by PBS during post-census periods reveals startling insights. BR Research developed price and output indices by rebasing both volume (output) and value (price) of fresh milk and beef to the census years – 1986, 1996, 2006 and 2016 (scheduled) and analysed year-on-year change in decade-wise fashion. (Note: Each output trendline grows at a constant-rate because of inter-census constant growth rate assumption. For obvious reasons, rate of change is same post-2006 and post-2016 because no fresh census has been conducted).

Turns out that post-2016, year-on-year change in milk retail prices (fresh, loose milk) has been slowest when compared to annual increases in price during years following the first three census. The overall trends largely hold in the case of red meat (beef) as well, although price gradient is steeper post-2016 than in post-1996 census, but still much flatter than post-1986 and most recent post-2006 census.

This is surprising on two counts. First, long term trends towards increasing disposable income, growth in the Horeca industry (restaurant and catering businesses) and increasing consumer awareness viz importance of protein intake should have reinforced demand for dairy and beef, leading to steeper price-curve for recent years. And in case livestock population has been declining – without commensurate increases in dairy or meat yield – price spiral should have been strengthened instead of weakening.

Some explanations may appear intuitive. For example, increased substitution with poultry meat in daily diets may have helped keep demand for beef in check, despite purportedly shrinking supply. That’s all well, but what about milk? How has Pakistan managed to keep milk prices from spiralling out of control? Surely, there is certainly no substitution for milk.

While some may point to price controls on fresh milk and resultant adulteration in raw milk (to increase volume) as explanation, there may be other koshers reasons as well. Dairy industry insiders highlight that a high share of milk powder imported in the country is used to increase the volume of loose milk (a much healthier alternative to contamination or adulteration!). Moreover, decline in global skim milk powder prices by one-third in recent years helped keep domestic loose milk prices under control. While the extent of skim milk powder consumption in loose milk is unknown, it also helps explain the rise in milk prices in the shorter term (since 2019; possible effects of currency depreciation making imported SMP expensive, and the more recent rebound due to global commodity prices).

Bottom line is that in absence of a valid and recent census, there is really no way to know what may be going on in the livestock segment. If livestock products prices have remained in check because the sectoral output is growing, the administration will have much reason to declare victory and rebase GDP using a bigger economic valueadd for livestock. It will also have good reason to proudly congratulate itself for finishing what others couldn’t manage and delivering better governance. And in case livestock population has indeed shrunk, there are always ghosts from the past to pile the blame on. And in this case, the blame may be well-deserved.


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