Assessing the effects of cattle enterprises on household welfare in Uganda

Abstract

The livestock sector's growing economic importance and its impact on livestock-keeping communities' welfare are increasingly recognised. While recent policies prioritise beef and dairy value chains for poverty eradication and economic growth, there's limited evidence on how this translates to household-level improvements. This study analyses Uganda National Panel Survey (2015, 2018, 2020) to assess the economic effects of dairy, beef, and dual-purpose cattle enterprises on household welfare. The analysis employs panel multinomial endogenous switching regression and panel estimator methods to investigate the factors influencing household cattle enterprise choices. To address selection bias and endogeneity, the study utilises approaches developed by Mundlak (1978) Murtazashvili and Wooldridge (2016).The primary focus is on understanding how different cattle enterprises impact household consumption expenditure, a key indicator of household welfare. The results reveal significant differences in household welfare across various cattle enterprises. The Average Treatment Effects (ATEs) show an increasing trend from beef to dairy to dual-purpose enterprises, indicating that more specialised cattle enterprises have the potential to substantially improve household welfare. However, the Average Treatment Effects on the Treated (ATTs) are relatively similar across all enterprises, suggesting that while cattle keeping households in these enterprises experience welfare benefits, they are not fully realising the potential advantages, particularly in dairy and dual-purpose enterprises. This discrepancy highlights the presence of barriers that may prevent households from fully capitalising on the welfare-enhancing potential of these enterprises. This analysis provides new insights into the relationship between livestock enterprises and household welfare in Uganda, offering important implications for policymakers. It underscores the need for targeted interventions to help cattle-keeping households overcome barriers and maximise the welfare benefits associated with their enterprises.