Milk Production Response in Pakistan

In third world countries, where the level of mechanization inagriculture is low, livestock rearing is mainly for draught purpose. On theother hand, the use of animals for draught purpose is low in developedcountries owing to the high level of farm mechanization and the animals aremainly reared for the consumption of meat and milk. Milk production inPakistan is an important enterprise for over five million households owningbuffaloes and cattle. Supply response of livestock has been undertaken mostlyin developed countries. In developing countries livestock farming is not doneon a large scale basis. This study is an attempt to obtain the best estimates ofthe response of milk producers while making a decision about productionallocation of milk in Pakistan. The main objectives of the study are: (1) to testwhether Pakistani milk producers respond to price movements (2) to estimatethe elasticities of production with respect to milk producers: (a) relative price(b) credit and lagged production (c) to make a comparison of short-run andlong-run price elasticities with that of developed and underdeveloped countries(d) to identify policy measures. The study is based on secondary data at thePakistan level and covers a period of 31 years, starting from 1971-72 to2002-03. Marc Nerlove’s (1958) partial adjustment lagged model is used forthe study. The result of the analysis reveals that in the process of making theproduction decisions for milk production, all the variables (relative price,credit availability and lagged milk production) are equally important.