Lila Karki, Siegfried Bauer:
Foreign Aided Projects and Rural Livelihoods. Analysis of Impact of Project Intervention on Production Efficiency -- A Case of Livestock Development Project in the Mid Hill Region, Nepal


Justus-Liebig-Universität Giessen, Institute of Project and Regional Plannig, Germany

The agricultural sector is still the backbone and major source of livelihood for 81% rural inhabitants in Nepal. It contributes 39% to the GDP. The livestock sector is an indispensable component to sustain agricultural system, which contributes 31% to agricultural and 18% to national GDP. The upward trend of livestock contribution to the economy has widened possibilities for future investment, gender balanced development, and rural employment. This sector, however, has acute resource constraints since the overwhelming majority of the pastoralists are resource poor producers.

The government endeavor to increase the livestock productivity has been assisted by multinational donors. The amount of external assistance in livestock component has been in excess of US$ 247 million over the past 20 years. To find out the impacts of such donor assisted projects at household level, specifically on farmers' efficiency on resource allocation and production optimization of livestock enterprises, is the major objective of this paper.

A with and without project evaluation approach was applied as a research methodology to test the hypothesis that efficiency of project intervened farmers would be higher. A household survey was conducted to collect primary data applying multi-stage random sampling procedure for 165 households. The collected cross sectional data was processed and analyzed using descriptive statistics, econometric models of COBB-DOUGLAS and Translog types Stochastic yield functions and qualitative analysis.

The hypothesis is partially proven. Of the four commodities analyzed, the mean technical efficiencies for producing goat meat, cow milk and egg are found higher with treatment group (64%, 48% and 82% respectively) than that of control group (56%, 43% and 70% respectively). Unlike these three commodities, converse result is obtained in case of buffalo milk production.

Therefore, mitigating factors causing low level of technical efficiency as revealed by econometric results would help make farmers more efficient in order to increase the overall production efficiency of livestock enterprises and thereby improve livelihood of the rural inhabitants who are primarily involved in livestock farming.

Keywords: Project intervention, livestock commodities, rural households, impact on efficiency

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Contact Address: Lila Karki, Justus-Liebig-Universität Giessen, Institute of Project and Regional PlannigSenckenbergstraße 3, D-35390 Gießen, Germany, e-mail:
Andreas Deininger, September 2004