Madeeha Omer Lakhani, Sana Tauseef, Wajid Ali Chattha
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引用次数: 0
Abstract
Purpose
This research aims to investigate the feasibility of formalizing an old, informal livestock financing practice in Pakistan known as Adhyara through assessment of estimated return and risk.
Design/methodology/approach
The hedonic pricing model was employed to estimate the impact of breed, weight, pregnancy status and milk yield on cattle sales price, and 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 a survey of dairy farms and data on terms of Adhyara deal were obtained from a survey of nomad pastoralists and current investors. In-depth interviews were also conducted with different stakeholders to get insights into this informal livestock practice and social elements.
Findings
Results from the hedonic model show that the animal prices in Pakistan are highly variable depending on the animal attributes of breed, weight, milk yield and pregnancy status with an average value of PKR (Pakistani Rupee) 191,771 and standard deviation of PKR 66,762. Our stochastic simulation reveals mean estimated real return of 24 per cent. This return is competitive considering local and international investment alternatives.
Social implications
The research identifies a lucrative and market competitive investment option and thus opens the window of opportunity to introduce grass root entrepreneurship in the livestock sector. Recommended formalization of this traditional livestock practice can boost investment creating substantial potential for the uplift of local communities and simultaneously contribute towards the goals of poverty eradication, food provision and employment generation for women.
Originality/value
This research lays out the possibility of formalizing the practice of a traditional livestock financing in an agricultural country.
期刊介绍：
Agricultural Finance Review provides a rigorous forum for the publication of theory and empirical work related solely to issues in agricultural and agribusiness finance. Contributions come from academic and industry experts across the world and address a wide range of topics including: Agricultural finance, Agricultural policy related to agricultural finance and risk issues, Agricultural lending and credit issues, Farm credit, Businesses and financial risks affecting agriculture and agribusiness, Agricultural policies affecting farm or agribusiness risks and profitability, Risk management strategies including the use of futures and options, Rural credit in developing economies, Microfinance and microcredit applied to agriculture and rural development, Financial efficiency, Agriculture insurance and reinsurance. Agricultural Finance Review is committed to research addressing (1) factors affecting or influencing the financing of agriculture and agribusiness in both developed and developing nations; (2) the broadest aspect of risk assessment and risk management strategies affecting agriculture; and (3) government policies affecting farm profitability, liquidity, and access to credit.
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