Market integration and agricultural development: The case of Tibet's ruminant livestock industries

Expanding livestock production is widely promoted as a way of improving livelihoods of smallholder farmers. However the rudimentary, insular and relatively small size of markets in which many smallholders operate means that rapid livestock industry expansion can have an adverse impact on prices and livelihoods. The link between market integration, livestock industry development and smallholder livelihoods is examined in the case of ruminant livestock industry expansion in Tibet. The analysis finds some transmission between Chinese and Tibetan sheepmeat prices and that this integration with the broader Chinese market and its favourable medium term outlook is crucial to any livestock industry expansion given the current low margins for sheep for Tibetan farmers. While Tibet milk prices exceed eastern China prices, and evidence of transmission is less pronounced, the outcome for smallholder Tibetan dairy farmers in doubling their cow numbers is better in an integrated market than in an insular market. Thus the analysis highlights the importance for ruminant livestock industry expansion in Tibet of integration with broader Chinese markets while also highlighting the need to consider market integration when assessing livestock industry development strategies for smallholder farmers.