AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU

Transcription

1 AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU By P. VENKATESH, B.Sc., (Ag.) THESIS SUBMITTED TO THE ACHARYA N.G.RANGA AGRICULTURAL UNIVERSITY IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF SCIENCE (AGRICULTURAL ECONOMICS) DEPARTMENT OF AGRICULTURAL ECONOMICS SRI VENKATESWARA AGRICULTURAL COLLEGE ACHARYA N.G.RANGA AGRICULTURAL UNIVERSITY TIRUPATI (A.P) 2004

2 CERTIFICATE Mr. P. VENKAETSH, has satisfactorily prosecuted the course of research and that the thesis entitled "AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU" submitted is the result of original research work and is of sufficiently high standard to warrant its presentation to the examination. I also certify that the thesis or part thereof has not been previously submitted by him for degree of any University. Date : Place : (Dr. S. SUBBA REDDY) Major Advisor Associate Professor & Head Department of Agricultural Economics S.V.Agricultural College Tirupati

3 CERTIFICATE This is to certify that the thesis entitled "AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU" submitted in partial fulfilment of the requirements for the degree of Master of Science in Agriculture of the Acharya N.G. Ranga Agricultural University, Hyderabad, is a record of the bonafide research work carried out by Mr. P.VENKATESH, under our guidance and supervision. The subject of the thesis has been approved by the Student s Advisory Committee. No part of the thesis has been submitted by the student for any other degree or diploma. The published part has been fully acknowledged. All assistance and help received during the course of the investigation has been duly acknowledged by the author of the thesis. Thesis approved by the Student Advisory Committee : (Dr. S. SUBBA REDDY) Chairman of the Advisory Committee Chairman (Dr. S. SUBBA REDDY) Associate Professor & Head Department of Agricultural Economics S.V.Agricultural college, Tirupati. Member (Dr. P. RAGHU RAM) Associate Professor Department of Agricultural Economics S.V.Agricultural college, Tirupati. Member (Dr. S. ISMAIL) Associate Professor & Head Department of Statistics & Mathematics S.V. Agricultural College, Tirupati. Member (Dr. K. SARJAN RAO) Associate Professor Department of Livestock Production & Management College of Veterinary Science Tirupati

4 DECLARATION I, Mr. P. VENKATESH, hereby declare that the thesis entitled "AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU is a result of original research work done by me. I further declare that the thesis or part thereof has not been published earlier elsewhere in any manner. Date: (P. VENKATESH)

5 CONTENTS Chapter No. I INTRODUCTION Title Page No. II REVIEW OF LITERATURE III METHODOLOGY IV AGRO-ECONOMIC FEATURES V RESULTS AND DISCUSSION VI SUMMARY AND CONCLUSIONS LITERATURE CITED APPENDIX

6 LIST OF TABLES Table No. Title 3.1 Block wise bovine population of Madurai district 3.2 Breed wise population of milch cattle in Madurai district 3.3 Feeds and Fodders mixtures table 4.1 Rainfall pattern on Madurai district 4.2 Land utilization pattern of Madurai district 4.3 Source wise area of irrigation potential of Madurai district 4.4 Size of holdings number and area wise 4.5 Cropping pattern and cropping season 4.6 Bovine population 5.1 Characteristics of samples farms Human labour utilisation per animal per lactation Feeds and Fodders cost per animal per lactation Cost structure in milk production on sample farms per animal per lactation Cost of production of milk per litre 5.4 Returns from dairy enterprise per animal per lactation 5.5 Economics of milk production (per litre) 5.6 Break - Even analysis in dairy enterprise 5.7 Comparison of optimal feeding plan with existing feeding plan on small farms per animal per day 5.8 Comparison of optimal feeding plan with existing feeding plan on large farms per animal per day Regression coefficients of sample farms Optimum level of input use on sample farms in the production of milk per animal per day Cost of production of ghee per day Cost of production of butter per day Cost of production of skim milk powder per day Cost of production of milk khoa per day Cost of production of standardized milk per day Cost of production of butter milk per day 5.10 Returns of dairy products per day 5.11 Break - even analysis of dairy products Page No.

7 LIST OF ILLUSTRATIONS Fig. No. Title 3.1 Map showing Madurai District Page No. 3.2 Map showing selected blocks 5.1 Cost structure in milk production on sample farms 5.2 Optimum level of input use on sample farms in production of milk 5.3 Optimum level of input use on sample farms in production of milk 5.4 Cost of production of dairy products per day LIST OF APPENDICES Sl. No. Title 1 Linear programming model for determination of optimum feeds and fodders mixture Page No.

8 ACKNOWLEDGEMENTS It is by the profuse love and blessings of the Almighty I succeeded in every moment of my life. I am in deep concern express my great sense of honour, love, heartful regards to my beloved parents and all other family members for their ever lasting love, blessings, unparallel affection, moral support and dedicated efforts to shape my career and personality. I have no words to express my deepest sense of gratitude to Chairman of my advisory committee Dr. S. Subba Reddy, Associate Professor, Department of Agricultural Economics, S.V. Agricultural College, Tirupathi for his valuable suggestions, evincive criticism and sedulous efforts right from conceptualization of the research work to the completion of it. I respectfully acknowledge my sincere feeling of gratitude to Dr.P.Raghuram, Associate Professor, Department of Agricultural Economics, Dr.S.Ismail, Associate Professor & Head, Department of Statistics and Mathematics, S.V.Agricultural College, Tirupati, Dr. K. Sarjan Rao, Associate Professor, Department of Livestock Production and Management, College of Veterinary Science, Tirupati, for their kind co-operation, valuable suggestions and immense help throughout the period of my study. Its my privilege to convey my deep sense of gratitude and candid thanks to Dr. T.V. Neelakanta Sastry, Associate Professor and Head, Department of Agricultural Economics, Agricultural College, Mahanandi, Nandyal, Sri B. Pratap Reddy, Assistant Professor, and Smt. I. Bhavani Devi, Assistant

9 Professor, Department of Agricultural Economics, S.V. Agricultural College, Tirupati for their constant encouragement, guidance and suggestions, without which the research would not have progressed smoothly. I feel immense pleasure and joy in expressing my profound etiquette and intrinsic affection to all my friends, my colleagues, senior friends and junior friends. I wish to thanks Smt. Prabhavathi and Smt. Nageswari for their timely help during the period of my study. The financial assistance given by the Indian Council of Agricultural Research, New Delhi in the form of stipend during my Post graduation I greatly acknowledged. I express my thanks to Mr. J. Hemanth Reddy, Hemanth Computer Center for the neat and excellent execution of this manuscript. Finally I record my deep sense thanks to all those who have helped me directly and indirectly to shape up my career and personality and to bring out this work in the present form. (P. Venkatesh.. )

10 ABSTRACT Name of the author : P. VENKATESH Title of the thesis : "AN ECONOMIC ANALYSIS OF PRODUCTION AND PROCESSING OF MILK IN MADURAI DISTRICT OF TAMILNADU" Degree to which it is submitted : MASTER OF SCIENCE IN AGRICULTURE Faculty : AGRICULTURE Discipline : AGRICULTURAL ECONOMICS Major Advisor : Dr. S. SUBBA REDDY University : ACHARYA N.G.RANGA AGRICULTURAL UNIVERSITY Year of submission : 2004 The present study entitled "An Economic Analysis Of Production And Processing Of Milk In Madurai District Of Tamil Nadu" was undertaken to study the costs and returns of milk production and processing, resource productivity on dairy farms and to determine the optimum feeding plan for milch cattle. The study was conducted in Madurai district of Tamil Nadu. Two blocks with the highest number of milch cattle were purposively selected. From each block, two villages were purposively selected to draw an ultimate sample of 60 dairy farmers, representing small and large categories. One milk processing unit was purposively selected. The relevant data were collected by survey method for the year The average herd size of the sample farms were 2.26, 5.06 and 3.36 on small, large and pooled farms, respectively. The human labour employed per animal per lactation was and men equivalent days on small, large and pooled farms, respectively.

11 The total cost of production per animal per lactation was Rs , Rs and Rs on small large and pooled farms, respectively. In the total costs, the variable costs percentage share was 89.68, and respective, farms. The cost of production of milk per litre was Rs. 5.39, Rs and Rs on small, large and pooled farms, respectively. The net returns were in the order of Rs. 10,026.85, Rs and Rs on small, large and pooled farms, respectively. The rate of return on investment was 0.78, 1.08 and 0.95 on the above farms, respectively. The break even output of milk was , and litres per animal per lactation against the actual output of milk , and liters per animal per lactation on small, large and pooled farms, respectively. In the optimum feeding plan was reduced the total feed cost by Rs and Rs on small and large farms, respectively. In the production function analysis all the variables included in the model were positive and significant for both the farms except human labour use on small farms. All the resources were under used in both the farms except human labour use on small farms. The average cost of production of dairy product were in the order of Rs per kg, Rs per kg, Rs per kg, Rs per kg, Rs per litre and Rs per sachet for ghee, butter, skim milk powder, milk khoa, standardized milk and butter milk, respectively. The total output per day was 634 kg, 1892 kg, 4022 kg 126 kg, litres and 1150 sachets for the above said products, respectively. The net returns per day per produce were in the order of Rs , Rs , Rs , Rs , Rs and Rs for ghee, butter skim milk powder milk khoa, standardized milk and butter milk, respectively. The rate of return was 0.32, 1.83, 0.56,0.98, 0.27 and 1.06 for the respective products.

12 CHAPTER - I INTRODUCTION India is blessed with a huge bovine population of 196 million cattle and 80 million buffaloes accounting for about 51 per cent of Asia and about 19 per cent of world bovine population.* Indian agriculture is an economic symbiosis of crop and livestock production and cattle is the foundation of Indian agriculture. For small farmers, cattle is perhaps the only tangible asset and main stay for their socio - economic security. Livestock rearing is an integral part of crop farming and contributes substantially to the household nutritional security and poverty alleviation through increased household income. Among the many livestock enterprises, dairying is the most easiest occupation established in the rural setting of our country. Dairy industry provides draught power, manure and cash income and augments the crop production. * The Hindu survey of Indian Agriculture 2002, pp

13 Dairy sector in India provides regular employment to 9.8 million people in principal status and 8.6 million people in subsidiary status which together constitute 5 per cent of the total work force.* Dairying, as a profession revolves around milk and milk products. Milk production is undertaken by a wider range of milk producers. Dairy products are produced by both organised and unorganised sectors, the latter is still playing a dominant role. Dairy Management is emerging as a specialized professional discipline. India's status in dairying is characterised by the fact that this country has emerged as the largest milk producer in the world with a record production of 84.5 million during Buffalo contributes largest to the milk production with million tonnes (55%) followed by indigenous cows with million tonnes (24%) and crossbred cows with million tonnes (16%). Goats contribute about 4.2 million tonnes (5%) to the total milk pool.** *The Hindu Survey of Indian Agriculture, 2002, pp ** N. Balaraman, Indian Dairyman, 2003, 55(3), pp

14 The contribution of animal husbandry and dairying to total gross domestic product (GDP) was 5.9 per cent in at current prices. The value of output of livestock and fisheries sector was estimated to be Rs.1,70,205 crore during , which was 30.3 per cent of the total value of output of Rs. 5,61,717 crore from the agriculture and allied sectors. The contribution of the milk group alone (Rs. 1,01,990 crore) was higher than wheat (Rs. 47,091 crore) and sugarcane (Rs. 27,647 crore). The overall growth rate in the livestock sector was steady (around 4.7 per cent) inspite of the fact that investment in this sector was not substantial. If the ownership of livestock is more evenly distributed amongst landless labourers and marginal farmers, the progress in this sector will result in a balanced development of the rural economy*. However, comparison of per capita milk availability in various countries showed that India ranked 57 th in the world. The per capita availability of milk was only 112 g/day in increased to 226 g/day in indicating a growth in production.** *Kumar D and Sudhakar T, Yojana, May 2004, (48) pp **The Survey of Indian Agriculture, 2004, pp

15 In productivity terms, our country continues to record very low figures wherein indigenous cows yield was 1.89 kg, crossbred cows 6.46 kg, buffaloes 3.91 kg and goats 300ml per day. It must be understood that our production systems are not intensive commercial systems but subsidiary and supplemental systems. In spite of being the world's largest milk producer, India's milk processing industry is not very large. Only 12 per cent of milk is delivered to dairies as against the world average of 70 per cent. In certain countries like New Zealand almost 98 per cent of milk production is processed. Bulk of Indian milk is utilized for drinking or in the unorganized sector for making sweets or other traditional products.* The world dairy is zooming on India for its rapidly growing market. The changing international dairy trade pattern, following GATT and the emergence of World Trade Organization (WTO) offers the dairy industry an opportunity to take its role as an exporter. India's enthusiasm to integrate with world's economy is reflected in * A.K.Jain Indian Dairyman, 2002,54( 2), pp. 123.

16 technological upgradation, professional excellence and cost-effective approach. It is already recognized as a centre for exports of milk products and services to countries in Asia. As a consequence of economic liberalization and globalization, it has brought new players in the field of domestic industry. Processing capacities are being expanded, collaboration with multinational corporations for production, processing are taking shape, imports have been liberalized and is going to affect the existing domestic industry. In such a dynamic mega environment, financial success of dairy plant depends upon many external and internal factors. PROBLEM STATEMENT It is increasingly recognized that dairying could play a more constructive role in promoting rural welfare and reducing poverty. Madurai, one among the districts of Tamil Nadu constitutes more than 75 per cent of the rural population, whose main occupation is agriculture and allied activities like dairying, goat rearing and poultry keeping, etc. Though dairying is being effectively practiced, the information on cost and incomes from milk production pertains to the study area is scanty and falls short of making any economic generalizations. It is the one, which is most important from producer point of view who under takes dairying and milk

17 processing as a new profession. It is in this context the study was undertaken an in-depth study on economics of milk production in various herd size categories of different households and processing milk in Madurai District of Tamil Nadu,with the following specific objectives. 1.1 OBJECTIVES OF THE STUDY 1. to estimate the costs and returns of production of milk. 2. to analyse the factors affecting the milk yield. 3. to work out the least cost combination of feed mixture. 4. to examine the costs and returns of milk processing unit. 1.2 PLAN OF THE THESIS The present thesis is presented in six chapters. The first chapter deals with the importance of milk production, bovine population and milk production statistics, productivity, specific objectives and limitations of the study and plan of thesis. Second chapter gives a brief appraisal of some of the past studies conducted on production and processing of milk. The third chapter deals with the materials and methods adopted for the study. The fourth chapter deals with the brief description of the characteristics of agriculture and livestock in Madurai district. The fifth chapter highlights a

18 critical analysis of results and discussion based on the primary data collected from sample farmers. Finally, the sixth chapter deals with summary and conclusions. 1.3 LIMITATIONS The study has limitations of time, limited sample size and resources at the disposal of investigator. Further the information collected and presented is dependent on the recall memory of sample dairy farmers, which have certain inherent limitations. The conclusions drawn from the farmer's data and dairy processing unit are based on the data collected for the agricultural year , which is undoubtly a very short period for drawing concrete recommendations. Along with this, single person research is always confronted with various bottlenecks. Inspite of all these limitations, utmost care was taken in collection of realistic data from the study area with the help of pre-tested questionnaires.

19 CHAPTER - II REVIEW OF LITERATURE For any scientific investigation, it is mandatory on the part of research worker to go through the earlier studies conducted so as to establish the body of existing knowledge and to relate further findings of the ensuing research. This enables the researcher and others to understand the methodology used by various researchers and thus the results help in understanding the realities under various circumstances. So, for brevity, various earlier studies related to the objectives of present study are presented chronologically as mentioned below, 2.1 Studies on costs and returns from milk production 2.2 Studies on production function analysis 2.3 Studies on application of linear programming and 2.4 Studies on processing and manufacturing cost of milk 2.1 STUDIES ON COSTS AND RETURNS FROM MILK PRODUCTION Rao and Parmar (1990) in their study revealed that the average total cost of maintenance of an animal per year amounted to Rs.5, and it

20 was higher on large farms. They also observed that the per litre cost of milk production at Rs Devraj and Gupta (1991) conducted a study on economics of milk production in Churu district of Rajasthan. They concluded that cost of production of lactating buffaloes and local cows was Rs.3.96 and Rs. 4.per litre, respectively. They also reported that green fodder and concentrates were the most significant inputs influencing the milk yield. Ram and Sharma (1991) in their study in Uttar Pradesh proved that the average gross income per family per annum from different sources was Rs.5,304, Rs.ll,381 and Rs.20,910 for landless, marginal and small farmers respectively. Dairying contributed 51, 23 and 15 per cent of the family income in the three respective categories of households. Rao et al. (1991) in their study observed that the total cost of milk production per milch buffalo per annum ranged from Rs.9,612 on large farms to Rs.I0,026 on small farms, the average being about Rs.9,754. They also revealed that the feed and fodder costs together accounted for about 71 per cent of the total cost, of which concentrates took a lion's share (32.50

21 per cent) Human labour was the next major item of cost, accounting for about 9 per cent of the total cost of production. The net income per annum varied between Rs.l,979 on small farms and Rs.2,634 on large farms. Shanmugam's study (1991) revealed that the total cost for a dairy unit of ten crossbred cows was Rs.78, Among that, fixed costs and variable costs amounted to Rs.16, and Rs.61, respectively. Total return and net return stood at Rs.97,000 and Rs.18, respectively. Rani. et al. (1991) in their study estimated that on an average total maintenance cost was Rs.2,762.93, whereas gross income and net income stood at Rs.3, and Rs per milch animal per annum respectively. It was observed that higher net income was realised (Rs.l,319.19) by large producers compared to small (Rs ) and medium producers (Rs ). Kumar and Gupta (1992) conducted a study on the economics of buffalo milk production in Muzaffar Nagar district of Uttar Pradesh. They have classified the households into five categories and calculated the costs

22 and returns of milk production. The study revealed that the feed cost constituted nearly two-thirds of total cost of buffalo milk production and.it was found to be the highest for the upper medium farmers and lowest for the landless labourers. The average worked out to be Rs.3,159 for all categories of the households. They concluded that the negative or low returns from buffalo milk production was evidently due to low milk yield caused by inadequate feeding and longer dry periods which resulted in a higher cost of milk production. Vasavi et al. (1992) studied the costs and returns of buffalo milk production in Rajkot district of Saurashtra region and found that the average cost of milk production per litre worked out to Rs.4.88, which was the highest in the case of landless labour (Rs.4.92) and lowest in respect of large farmers (Rs.4.84) from among the four size groups chosen for the study. The dry fodder ranked first in the average total cost per litre of milk production (Rs.1.29), followed by concentrates (Rs.1.27), green fodder and labour charges (Rs.1.12 for each). The average price per litre of milk was Rs.5.12 which was higher by 36 paise than that of the net cost of milk production per litre.

23 Chauhan and Gupta (1993) observed that average cost of rearing was Rs.3,277, Rs.6,232, Rs.7,325 and Rs.6,825 per local cow, cross bred cow, pure bred cow and buffalo respectively in rural areas of Himachal Pradesh. The feed and fodder together accounted for about 46, 56, 65 and 58 per cent of the total costs for local cow, cross bred cow, purebred cow and buffalo respectively. Per litre cost of milk production worked out to Rs.7.89 per local cow, Rs.4.77 for crossbred cow, Rs.3.50 for purebred cow and Rs.4.45 for buffalo. Ram et al., (1993) reported that the average cost of production of milk was Rs.3.07 per litre for different categories of households. The feed and fodder was the major component, accounting for 64.4 per cent of total cost, followed by labour (14.9 per cent), fixed cost (13.58 per cent) and miscellaneous recurring expenditure (7.32 per cent). Net cost of milk production was Rs.3.02, Rs.3.03 and Rs.3.10 for landless cattle owners, marginal and small farmers respectively. The net income (profit margin over cost C) was highest for marginal farmers (98.41 paise), followed by landless cattle owners (97.57 paise) and small farmers (92.13 paise). They also revealed that dairy enterprise in the sugarcane growing regions was a remunerative proposition, for weaker section households.

24 Rajendran and Prabaharan (1993) found out that the large farmer category ranked first in milk production, to the tune of litres per day per household as against litres among landless category. The figures for marginal and small holdings were and litres respectively. Total cost of production of milk in the case of buffalo, crossbred cow and desi cow for landless labourers, marginal farmers, small farmers and large farmers stood at Rs.2,930.63, Rs.5,100.03, Rs.2, , Rs. 3, , Rs.700,05, Rs,2,058.00; Rs.3,411.14, Rs. 4,922.80, Rs.2,596.71; Rs.3,838.66, Rs.5, and Rs.2, respectively. The cost of production per litre of milk worked out to Rs.2.93, Rs.2.90, Rs.2.89; Rs.3.17, Rs.2.58, Rs.2.64; Rs.3.25, Rs.2.80, Rs.3.15; Rs.3.30, Rs.2.92 and Rs.3.30 respectively for buffalo, crossbred cow and desi cow of landless labourer, marginal farmer, small farmer and large farmer categories. Deoghare and Bhattacharya (1994) examined the economics of milk production in Mathura district of UP and observed that expenditure on fodder and concentrates formed the major share in the total cost of production. Net returns per buffalo per year was highest for large farms (Rs ) followed by medium farms (Rs ). Income was low

25 on marginal farms (Rs ). Average cost per litre of buffalo milk was Rs Singh et al., (1994) analysed the investment pattern on dairy enterprise on different categories of beneficiary and non-beneficiary households viz., landless and marginal farmers and arrived at the following conclusions. Among the different types of investment in dairy enterprise, the cost of livestock accounted for 77 per cent on beneficiary households, as against 68 per cent on non-beneficiary households, followed by cattle shed and store with 17 per cent of investment on beneficiary households and 24 per cent on non-beneficiary households. The investment on dairy equipment was about 6 per cent and 7 per cent on beneficiary and nonbeneficiary households respectively. Suguna's (1994) study revealed that the total costs were Rs.10,080, Rs.8,252 and Rs.9,166 in descript small, large and average farms and Rs.6,102, Rs.5,834 and Rs.5,468 on non-descript small; large and average categories of buffalo farms respectively. She also stated that the feed was the most important item in total cost accounted for about per cent, and per cent and per cent among descript small, large and

26 average categories and per cent, per cent and per cent per cent among non-descript small, large and average categories. The total returns worked out to Rs.19,682, Rs.18,130 and Rs.13,905 in small, large and average categories of descript buffaloes whereas in non-descript buffaloes the same were Rs.12,613, Rs.11,448 and Rs.11,530 for corresponding farms. The break-even milk yield stood at lit, lts and lts for descript small, large and average farms and lts, lts and lts for non-descript buffaloes on corresponding farms respectively. Balishter and Singh (1995) conducted a study on cost and incomes from buffalo in Agra district of Uttar Pradesh. Maintenance cost, milk yield, milk production cost, gross and net return of buffalo keeping worked out and it was found that net returns were quite high for households maintaining more than one buffalo. Net return could be increased, if arrangements were made for supply of green fodder and concentrates at subsidised rates by development agencies. Gaikwad and Gampawar (1995) while working out the cost of milk production revealed that the same per day stood at Rs.5.73 and Rs.6.75

27 respectively for milch cows and dry cows. The major components of cost of milk production were feed followed by labour and supervision, miscellaneous, replacement cost and health cover. Kalra et al. (1995) from their study indicated that the cost of buffalo milk production was Rs.5.11, Rs.4.75 and Rs.4.95 per litre for Eastern zone, Western zone and Haryana respectively. The figures for cross bred cow were Rs.3.18, Rs.3.95 and Rs.3.35 per litre respectively. The per litre gross returns were Rs. 5.63, Rs.5.97 and Rs.5.80 respectively. Shiyani et al. (1989) estimated that the average total cost of milk production per litre in the case of buffalo amounted to Rs.5.65 in respect of the H 3 (three or more buffaloes) herd, Rs.5.85 for H 2 (two buffaloes) and Rs.6.14 for H 1 (one buffalo) herd. The milk yield per day was highest in the herd size of H 3 (5.88) followed by H 1 (5.84) and H2 (5.60). The average total cost of maintaining a milch cow per day was Rs.7.77 for H 1 (one cow) and Rs for (two or more cows). The milk yield of milch cow for H 2 was 4.22 litres and for H 1 herd was 4.20 litres.

28 Shiyani and Singh (1995) from their study found out that the average total cost of maintaining a buffalo per day was as high as Rs in the case of the member respondents as against Rs for the non-member milk producers. The corresponding figures for the milch cow were Rs and Rs The milk yield per day per milch buffalo for the overall period was 6.29 litres in respect of members and 5.18 litres for the nonmembers, while the respective figures for cow stood at 4.52 and 3.95 litres suggesting that there existed a scope of increasing the milk yield for the non-members through better management and feeding practices. Tripathi (1995) in his study observed that the total cost of maintenance per cow during the year, ranged from Rs.2,215 in valleys to Rs.3,366 on high hills, the average being Rs.2,875. The human labour cost formed a lion's share of maintenance accounting for more than 61 per cent of the total maintenance cost. The high labour cost was mainly due to much human labour involvement in grazing the milch animals. The gross return varied from Rs.852 in valley to Rs.1,257 on high hill farms per cow per year.

29 Baruah et al. (1996) estimated the total cost incurred per lactating animal per annum at Rs.17,303.92, Rs.17,806.66, Rs.17,148.25, Rs.16, and Rs.16, respectively for marginal, lower, medium, upper medium and large unit sizes. The study also revealed that the total return per milch animal was highest (Rs.19,343.79) in lower unit size, while it was the lowest (Rs.17,523.57) in upper medium unit size. The same figures for marginal, medium and large sized units were Rs.8,211.49, Rs.18, and Rs.18, respectively. Dixit and Laharia (1996) estimated the milk production per cow and buffalo in at 2.35 and 4.35 kilograms, respectively which increased to 3.50 and 4.88 kilograms in So, it was inferred that milk production per cow and buffalo went up by and 8.04 per cent, respectively since The rate of increase in milk production was very slow in cattle despite the fact that crossbreds were very enthusiastically introduced in the state. Gupta and Agarwal (1996) conducted a study on economics of milk production in Himachal Pradesh and revealed that of all the types of milch animals, the crossbred cow produced milk at the lowest cost (Rs.4.68 per

30 litre). Although dairying is an economically viable enterprise in the states, the net return from it was quite meager. It was due to low milk yield caused by inadequate feeding of milch animals. Among different categories of milk production, the landless labourers earned the highest net return per litre of milk from crossbred cows and upper medium farmers from buffalo. Singh and Ameeta (1996) in their study in Khurda district of Orissa revealed that irrespective of farm size classes, there was the superiority of buffaloes over cows atleast in respect of three important economic variables viz., feed cost, milk yield and milk prices. This was obviously due to the fact that the consumption and absorption of better quality feed as measured in terms of increased expenditure on feed fed coupled with inherent genetic potentiality of buffaloes led to better quality milk production. This was true for all the farm size classes. As such, the price per unit of buffalo milk was Rs.7.71 per litre. This suggested that the feed-milk conversion quality attribute was the highest in buffaloes than that of cows. The increase in per day milk yield of buffaloes over cows nullified the increased feed costs and resulted in a lower feed cost per litre of milk in the case of all farm size classes except small farmers. But in the case of large farms, feed cost per

31 litre of buffalo milk was the minimum (Rs.3.66) followed by cow milk (Rs.4.13). Gaddi et al. (1997) in their study in Dharwad district of Karnataka estimated that the average cost of milk production was Rs.4.96 per litre in the case of cross breeds and it was Rs.6.76 for local breeds of cows. This high cost may be attributed to the high cost of feeds and more care for maintenance in the case of cross breeds and lower productivity noticed in local cows. Kumaravel (1998) in his survey on economic analysis of milk production and disposal pattern in Virudunagar district of TN concluded that rearing crossbred cows was more profitable one than local cows and negative incomes in case of local cows were largely attributed to their very low yield levels. Pawar (1998) found that dairy herd size was as high as 5.89 animals in large farm dairy unit followed by 3.85 and 3.08 milch animals in small farm and landless dairy units. On an average, herd size was 4.24 milch animals. The strength of crossbred cow, local cow and buffalo increased

32 with an increase in the farm size of dairy unit. In general, the investment on milch animals was as high as Rs.16,916 followed by Rs.4,491 and Rs.674 on the cattle sheds and equipment respectively. The total initial investment was highest with Rs.33,198 in the large farm dairy unit followed by Rs.20,707 and Rs.12,335 in the small farm and landless dairy units, respectively. Chand et al. (2002) studied commercial dairy herds in Arid region of Rajasthan. They estimated that the average cost of maintaining a cow was the highest in winter season followed by rainy and summer seasons. In the overall cost of maintenance, feed cost alone accounted for more than 70 per cent per animal per day. The over all net cost per animal per day was Rs. 53, Rs. 51 and Rs. 50 on small, medium and large herds respectively. The milk yield per animal per day in small, medium and large herds was 7.72, 7.30 and 7.13 lts respectively. The milk yield showed an increased trend from summer to winter season, whereas the price per litre of milk was highest in summer followed by rainy and winter seasons. Bardhan et al. (2004) studied cost and returns of milk production from indigenous cows in Udham Singh Nagar district of Uttarnchal. They

33 reported that, total maintenance cost of indigenous cows was highest for large farmers with Rs followed closely by small category at Rs and for marginal farmers Rs The feed and fodder cost comprised the most substantial part of total expenditure for all categories of farmers. The labour cost, total interest on fixed and working capital, the veterinary costs and depreciation accounted for 19.50%, 9.36%, 2.25% and 8.42% of total cost of production respectively. 2.2 STUDIES ON PRODUCTION FUNCTION ANALYSIS Singh and Singh (1987) in their study in Bihar observed from the results of regression equation for pooled data of landless, marginal and small farmers, that 71 per cent variation in total milk production per day was explained by the variables included in the function. The regression coefficients of concentrates, human labour and value of animals were positive and highly significant, showing their positive response on the milk production. The co-efficients of stage of lactation, and order of lactation were negative and statistically significant showing that as the animal advances in the state of lactation and order of lactation, its milk yield declined.

34 Raj (1991) conducted a study on the economics of milk production in Saurashtra region of Gujarat State and found out that concentrates had positive and significant impact on buffalos as well as cow milk production in almost all the categories of milk producers. The negative impact of the miscellaneous cost was found for buffalo milk production in all the dairy farmers except medium size group. The green fodder influenced positively the buffalo milk production. Mattigatti et al. (1992) evaluated the impact of Operation Flood Programme on resource productivity in cow milk production in Dharwad region of Karnataka. The results of the study indicated that the members of dairy co-operatives were found to have utilized the inputs like green fodder and labour efficiently, but the concentrates was inefficiently utilized. On the other hand, the non-members did not use any of the inputs efficiently. Murthy and Naidu (1992) found in their study that the feed and fodder were the important factors for increasing the milk production and the increase in their dosages and curtailment on the use of labour and veterinary aid would increase the production of milk.

35 Saxena (1992) in his study summarized that various input factors such as labour unit (X l ) roughage and feed cost (X 4 ) showed negative impact on gross value of milk production (Y), while concentrates (X 3 ) exhibited a positive and significant impact on gross value of milk production of cow. An increase in application of one unit of concentrates per cow would increase gross returns by one unit keeping other inputs constant. Rajendran and Prabaharan (1993) estimated the coefficient of multiple determination (R 2 ) for buffaloes and crossbred cows as 0.77 and 0.83, which indicated that the five specified variables explained 77 per cent and 83 per cent of variation in the milk production of buffaloes and crossbred cow respectively. The regression coefficient for the variable, value of concentrates (X 4 ) was for buffalo and for crossbred cow and found to be significant. This showed that there was a scope for increasing the milk production of buffalo and crossbred cow by increasing this input viz., concentrates. In the case of desi cow, the variables green fodder (X 1 ) and labour (X 4 ) were significant at 1 per cent level and the coefficient of multiple determination (R 2 ) was Hence, milk production

36 in desi cow can be increased by increasing the herd size as well as the quantity of concentrates. Sharma and Singh (1993) observed that green fodder, dry fodder and concentrates were the important inputs in.the milk production having significant regression coefficients. The regression coefficient of labour was positive and significant for all the breeds on the beneficiary households. The stage of lactation had a negative and significant impact on milk production on both the groups of households. The dummy variables for summer and rainy seasons had negative regression co-efficients in both the beneficiary and non-beneficiary households, except for local buffaloes for which the dummy variable for summer season was not significant. Thus it was confirmed that, milk yield was higher in the winter season as compared to the summer and rainy seasons in all the breeds of animals on the beneficiary and non-beneficiary households, except for local buffaloes. where there was no significant difference in milk yield in the summer and winter seasons. Kumar and Agarwal (1994) in their study found out that green fodder and concentrates showed positive and significant effect on milk yield both

37 in cows and buffaloes and the order of lactation, had negative and statistically significant effect on milk yield. Dry fodder, herd size and labour were found to be non-significant both in cows and buffaloes. They observed that the production elasticity of concentrates (0.5052) was highest followed by green fodder (0.3669) and labour (0.3503) for overall categories in the case of cows. The elasticity of green fodder on large farms was highest (1.2705) and more than unity and lowest for landless category (0.1106). In the case of buffaloes, the production elasticity of concentrates (0.4977) was highest on all categories followed by the elasticities for labour (0.1387) and green fodder (0.1038). Prasanna (1994) in her study found that the coefficients of number of milch animals, green fodder and dry fodder were positively significant at 0.01 level of probability. The marginal value products of all the variables were positive. The ratio of marginal value product to opportunity cost was more than one for the variables, milch cattle (5.4688), green fodder (1.3645) and dry-fodder (1.4082) while it was less than one for human labour (0.7756) and concentrates (0.5197). These results indicated that the gross income can be increased by increasing the number of milch cattle,

38 green fodder and dry fodder. The expenditure on human labour and concentrates should be immediately reduced as they were over used. Reddy and Raghuram (1994) in their study revealed that the input variables included explained 95 to 99 per cent variation in milk production. The MVP / MFC ratios of input variable viz., concentrate was higher for improved breed of milch cattle (1.51) than those of indigenous milch cattle, (1.09) while the same ratios were minimal for input variable X 5 i.e. the value of the animal, in murrah buffaloes and in indigenous milch cattle. There is a possibility of increasing milk yield by further intensifying the use of concentrates and purchasing improved breeds of milch cattle. Shah and Singh's (1994) study revealed that crossbred cows had better breeding efficiency in urban areas. Green fodder, concentrates and dry fodder were the inputs which had significant and positive impact on returns from milk in rainy, winter and summer seasons in rural area. However, in urban area, these feed inputs had positive and significant influence only in winter season. The marginal value product of green fodder in winter season indicated that the use of this resource should be

39 increased further in rural areas so as to make rational resource adjustments. In urban areas in some cases, the use of green fodder and concentrates should also be enhanced for higher milk production and profits. Suguna (1994) in her study found that the elasticities of green fodder (1.5548) and human labour (-0.904) were significant at one per cent level of probability in descript buffalo, whereas the elasticity of dry fodder (0.3966) alone was significant at one per cent level of probability in the case of nondescript buffalo farms. Shah and Sharma (1995) in their study revealed that the expenditure on concentrates was the single most significant factor affecting returns from milk. However, it was observed that one rupee additional investment resulted in more than one rupee additional returns from milk only in the case of murrah buffaloes in large household category in DUSS area and small and large households category in NDUSS area. They finally, analysed that there was a possibility of increasing returns from milk by increasing expenditure on concentrates in general and particularly so in the case of murrah buffaloes and crossbred cows.

40 Singh and Ameeta's (1996) analysis of production function estimates between size groups in Khurda district of Orissa indicated that in the case of marginal and small farms, both green fodder and dry fodder seemed to have least impact on milk yield of cows and buffaloes. The negative but significant coefficients associated with these two variables implied that green fodder and dry fodder fed to milch animals of these two categories of sample farms were in excess of requirement. This was quite obvious in view of the fact that in the absence of adequate grazing land, the,sample farmers generally collected grass from different fields after day's work or on off-days to fed the wet milk cows in anticipation of best substitute for concentrates, which was found to be of little relevance in the present study. But concentrates had a positive significant impact on milk yield of both cows and buffaloes. In the case of large farms, green fodder, dry fodder and concentrates had a positive significant impact on milk yield of cows and buffaloes. Shirsendu Roy (2001) studied the resource use efficiency of milk production in Panipat district of Haryana. His study revealed that the regression coefficient of herd size had a positive and significant effect on

41 milk yield showing positive relationship between the milk production and herd size. Lalwani and Koshta (2001) reported that concentrates, labour and capital flow were the major contributing factors to the milk yield. Over feeding of dry fodder and green fodder reduced the milk yield. Therefore balance feed must be provided to the milch animals. Prasad (2002) conducted a study on seasonal variations in buffalo milk production in Ranga Reddy district of Andhra Pradesh. His study revealed that concentrates contributed positively to the milk yield for all the breeds of buffaloes. The dummy variables for both the winter and rainy seasons had negative regression coefficients for the local and graded buffaloes but for murrah buffaloes the same were positive and significant for both the seasons. 2.3 STUDIES ON APPLICATION OF LINEAR PROGRAMMING Swanson (1955) was perhaps the first one to use electronic computer to solve minimum hog feed mix problems. He considered apart from protein and other fourteen nutrient requirements including vitamins. The

42 minimum cost solutions for four situations viz., (i) with bulk requirement of 35 per cent protein, (ii) without bulk requirement of 35 per cent protein, (iii) with bulk requirement of 40 per cent protein and (iv) with bulk requirement of 35 per cent protein under different price situations, were worked out for hogs. Howard et al. (1968) formulated two least cost linear programmed rations and compared them with conventionally formulated rations in a twenty week continuous trial. Analysis of opportunity costs indicated that the addition of urea accounted for about 60 per cent of the cost reduction attributable to the least cost rations. Bath et al. (1968) determined least cost concentrate mixes for dairy cows maintained in three commercial dairies of United States. Cows fed with least - cost mixes produced 1.31, 0.02 and 0.67 kg more milk with 0.13, 0.06 and 0.0 per cent less milk fat than the cows fed with control mixes. Dean et al. (1969) developed a linear programming model incorporating restrictions on roughage and concentrate components of

43 least-cost ration and maximum voluntary intake. The quantities of milk production maximizing income above feed costs were also determined. Nutritional specifications included body maintenance requirements and the milk production response curve associated with alternative levels of energy and protein fed, a maximum voluntary feed intake relationship, calcium, phosphorus in Uttar Pradesh. It was observed that, at lower levels of milk production, total cost of the optimal plans were slightly lower than the actual costs incurred by the farmers. It was inferred that the existing costs were not far different from the optimal costs, the rainy season being an exception where a little more emphasis on the green fodder over concentrates would lower the cost by more than 10 per cent. With the help of production functions, he questioned the rationality of Morrison's feeding standard for the animals under study. Bath et al. (1972) conducted two trails to evaluate computer formulated rations for dairy cows. Factors included feed prices, milk prices, milk production with varying levels of nutrients, maximum voluntary feed intake and productive ability of the cow. Cows fed the computer formulated rations returned 15 to 21 per cent more income above feed costs per year

44 than cows fed control rations formulated and fed according to management practices in effect in the herds before the initiation of trials. Yamadagni (1978) suggested ten point formula for better dairy feeds. He has discussed various aspects of feeding for milk production which included genetic improvements for increasing unit productivity, nutrient requirements of dairy cattle, dairy feed ingredients and the role of compounded dairy feeds. Reddy and Mathur (1980) worked out the economics of milk production and indicated changes in it due to different combinations of concentrate feeds and fodder fed to cross-bred cows. The concentrate requirements actually fed to an animal for lactation were estimated and the average excess / deficit quantity fed was worked out. Seven combinations of concentrates and fodder were specified for four different levels of milk production. Singh and Patel (1983) analysed the existing input-output levels in different fodder crops, availability of green fodder and economics of various fodder crop rotations followed on the farms in the villages under

45 the operational research project of NDRI, They reported that the fodder crop rotation of cowpea + berseem + mustard + maize yielded a maximum net income of Rs /ha among the six other combinations. Singh and Saini (1988) employed linear programming to integrate improved technology of crop and dairy production for increasing income and employment. They concluded that the optimization of resources under different farm plans resulted in increased income on marginal, small, medium and large farms. Adoption of improved technology in both the crop and dairy production increased the income of the farmers by 116 per cent (small farms) to 232 per cent (marginal farms) as compared to the existing plan. Ushasri et al. (1994) employed linear programming to examine the prospects of income and employment in rural areas of Krishna district of Andhra Pradesh and concluded that specialisation in a few crop enterprises along with cross bred buffalo unit would give more income than that of diversification.