Title

Assessing the financial sustainability of a rural livestock practice: the case of Pakistan

Abstract/Description

This research aims to investigate the feasibility of formalizing an old, informal livestock financing practice known as Adhyara in Pakistan through assessment of estimated return and risk. Hedonic pricing model was employed to estimate the impact of breed, weight, pregnancy status and milk yield on cattle sales price and the appropriate estimates were used for monetization. The stochastic simulation was then used to estimate the distribution of capital returns for investors in the informal livestock practice. Primary data on animal prices and attributes were obtained from survey of dairy farms and data on terms of Adhyara deal were obtained from survey of nomad pastoralists and current investors. Results reveal that animal prices in Pakistan are highly variable depending on the animal attributes. Our stochastic simulation reveals a mean estimated investment return of 24 percent. This return is competitive considering other local investment alternatives. Recommended formalization of traditional livestock practice can boost investment creating substantial potential for the uplifting of local communities and simultaneously contribute towards the goals of eradication of poverty, provision of food and generation of women employment.

Track

Accounting, Law, and Finance

Session Number/Theme

Session 2A

Session Chair

Dr. Hilal Anwar Butt, Institute of Business Administration, Karachi

Session Discussant

Tahira Mariam Jaffery; Zaira Anees; Dr. Sharjeel Ahmed Hasnie; Dr. Falik Shear

Start Date/Time

23-6-2022 3:30 PM

End Date/Time

23-6-2022 3:50 PM

Location

Training Room 3, Marriott Hotel, Karachi

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Jun 23rd, 3:30 PM Jun 23rd, 3:50 PM

Assessing the financial sustainability of a rural livestock practice: the case of Pakistan

Training Room 3, Marriott Hotel, Karachi

This research aims to investigate the feasibility of formalizing an old, informal livestock financing practice known as Adhyara in Pakistan through assessment of estimated return and risk. Hedonic pricing model was employed to estimate the impact of breed, weight, pregnancy status and milk yield on cattle sales price and the appropriate estimates were used for monetization. The stochastic simulation was then used to estimate the distribution of capital returns for investors in the informal livestock practice. Primary data on animal prices and attributes were obtained from survey of dairy farms and data on terms of Adhyara deal were obtained from survey of nomad pastoralists and current investors. Results reveal that animal prices in Pakistan are highly variable depending on the animal attributes. Our stochastic simulation reveals a mean estimated investment return of 24 percent. This return is competitive considering other local investment alternatives. Recommended formalization of traditional livestock practice can boost investment creating substantial potential for the uplifting of local communities and simultaneously contribute towards the goals of eradication of poverty, provision of food and generation of women employment.