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Agriculture is an important sector to Nepal, generating about one-third of the gross domestic product (GDP). Beyond contributing to GDP, it also provides employment for about two-thirds of the population (Ministry of Finance, 2015). Livestock is an important aspect of mixed farming in the agricultural sector, with dairy contributing 33 percent of total agricultural GDP. The dairy sub-sector is a major component of the livestock sector, generating about two-thirds (63 percent) of the livestock GDP. Livestock also contributes to the supply of money from the urban areas to the rural areas (Dinesh and Paudel, 2013). More importantly, the dairy sector is growing the Nepalese economy, which has led to increasing household incomes in the rural areas (Adhikari et al. 2015).  Cattle and buffalo are the primary animals used for milk production in Nepal, with almost three-fourths of the Nepalese households keeping cattle and one-half keeping buffalo, respectively. There were about seven million cattle and five million buffalo in Nepal in 2015. About 71 percent of milk production in Nepal comes from buffalo, while the remaining 29 percent comes from cows (MOAD, 2016). 

Despite the high population of cattle, their milk production is small when compared to buffalo. Many of the cows have passed their peak productive period, but Federal laws in Nepal prohibit these cows from being culled due to religious reasons. The religious factors affecting dairy farmers are a result of about 80 percent (2011 estimation) of the population being Hindu (Centre for Bureau of Statistics, 2013). The Hindu religion views cattle as a symbol of God, forbidding the slaughter or export of cattle. This denies an income source from the sale of cattle for slaughter and adds expense by forcing producers to maintain unproductive cattle. Anyone caught exporting cattle is subject to 20 years imprisonment. In contrast, buffalo can be sold for slaughter and generate income from animal sales. These practices and policies add to the cost of producing milk in Nepal and, ultimately, make it less competitive in the South Asia region. Assessing the impact of the no-slaughtering policy on milk production is thus of great importance to policymakers.

In this study, we estimated the impact of no-slaughter cattle policy on dairy producers using Latin Hypercube simulation to analyze a baseline and alternative scenarios for milk production in Nepal. The baseline scenario analyzes the current production practices, whereby farmers do not slaughter cattle, while the alternative scenario analyzes the situation where farmers would be able to slaughter or export dairy cattle. The result of the study indicated that farmers' profit per liter of milk produced increased by about 19 percent for the alternative scenario, while the total cost of producing milk remained the same for both the baseline and alternative scenarios. We concluded that Nepalese policymakers can make more informed decisions based on these results and could explore other means for achieving their goals without impacting the returns to dairy producers.

The study was made possible by the generous support of the American people through the United States Agency for International Development (USAID) and its Feed the Future Innovation Lab for Livestock Systems managed by the University of Florida and the International Livestock Research Institute. The contents are the responsibility of the author and do not necessarily reflect the views of USAID or the United States Government.

References

• Adhikari R.K., Gautam Kamal R, and Chapagain Suhrid P. (2015).
• Value Chain Analysis of Nepalese Dairy Sector. Heifer International Nepal, Lalitpur, Nepal Centre for Bureau of Statistics (2013).
• Nepal Statistical Yearbook 2013
• MOAD (2016). Statistical Information on Nepalese Agriculture. Ministry of Agriculture Development, Singh Durbar, Kathmandu, Nepal Ministry of Finance (2015). Economic Survey, Fiscal Year 2014/2015. Government of Nepa