Economic analysis of milk production in Rewari district of Haryana

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1 RESEARCH ARTICLE Economic analysis of milk production in Rewari district of Haryana Manish Kumar, Ashok Dhillon and V P Luhach Received : 29 January 2015 / Accepted : 25 March 2015 Abstract The present study was undertaken to find out the cost and returns from milk production in the Rewari district of Haryana. Multistage stratified random sampling technique was adopted to identify the study area. Rewari district was selected purposively and a total four villages were selected randomly from the two blocks namely Rewari and Bawal. A sample of 120 milk producing households consisting 72 small, 27 medium and 21 large farmers was drawn randomly. A tabular analysis was carried to work out the cost and returns from milk production. The results of the study showed that maintenance cost of a cow and buffalo for a year was found and 30311, respectively. Out of total maintenance cost, 80 % was the variable cost and 20 % was as the fixed cost for both cow and buffalo. With respect to various categories, the maintenance cost of buffalo and cow was found a little lower in small category than large category. This may be due to poor management by small category than large category. The average annual gross returns per cow and buffalo were observed Rs and Rs respectively, which is much higher than in case of cow. annual net returns per cow and buffalo were Rs and Rs respectively. Net returns per cow and buffalo too increased with the size of herds. The higher returns in large category were mainly due to higher number of cross-breed cows and better feeding of feeds and fodders than the other category. Keywords : Milk production, cost, returns, fixed cost, variable cost, cattle and buffalo Manish Kumar ( ), Ashok Dhillon 1 and V P Luhach 2 1 ES&M, KVK Mahendergarh, CCS Haryana Agricultural University, Hisar Haryana 2 CCS Haryana Agricultural University, Hisar Haryana Manish Kumar Deptt. of Agricultural Economics, CCS Haryana Agricultural University, Hisar Haryana. manishrariya8807@gmail.com Introduction India continues to be the largest producer of milk in the world. Several measure have been initiated by the government to increase the production of livestock, which has resulted in the increase in milk production significantly to the level of million tonnes at the end of the X plan ( ) as compared to 53.9 million tonnes in The estimate of milk production in was million tonnes as compared to million tonnes in indicating growth of 6 %, where as annual milk production in world is about 780 million tonnes in In India, Punjab is the largest producer of milk and highest in per capita milk consumption, whereas Haryana's per capita milk consumption is 680 gms much higher to India's per capita milk consumption that is 281 gms (Annual Report, AHDD ). India ranks first in respect of the number of buffaloes and ranks second, in cattle in the world. Livestock sector not only provides essential and nutritional human diet through milk and meats etc. It also provides raw material / by product such as skin, blood, bone fat etc. The contribution of milk alone is Rs crore which is higher than paddy ( crore ), wheat (Rs crore ) during In Haryana annual milk production is about lakh tonnes in (Annual Report, AHDD ). In India, more than 80 % of the cattle production comes from rural areas and about 70 % of the rural population is contributing toward milk production (V. K. Duhan 2003). Animal husbandry, dairy development sector play a significant role in the rural economy. It provides family income and help in generating gainful employment in the rural sector particularly among the landless labourers, small and marginal farmers. Livestock is the best enterprise against the vagaries of nature like drought, famine and other natural calamities. Many studies on cost, returns of cattle and buffalo milk production have been carried out in the past across the different parts of the country [Saxena (2000), Mudgal (2000), Sinha et al. (2002), Ashalata et al. (2004), Vedamurthy and Chauhan (2005), Kumar and Singh (2007), Yogi et al. (2007). An attempt in this direction has been made to estimate the cost and returns from milk production in Rewari district of Haryana. This paper analyzes the pattern and magnitude of 496

2 income generated by dairying across different regions and categories of farm sizes in the Rewari district of Haryana. Materials and Methods The present study was conducted in Rewari district of Haryana state which is based on the primary as well as secondary data during the year Sampling plan For the present study Multistage stratified random sampling technique was adopted. Rewari district of Haryana state was selected purposively keeping in view the convenience in data collection and location closed to national capital due to which there is competition among the private agencies for milk collection and distribution. From the selected district two blocks namely, Rewari and Bawal were selected randomly. Further, from each selected block two villages were chosen randomly. In this way Karnawas and Devlawas villages from Rewari block and Salawas and Kathuwas villages from Bawal block were selected randomly. Among the identified villages, complete lists of all milk producing households along with their number of milch animals and size of operational holding were prepared. The milk producing households were divided into three herd size categories by using cumulative total method. The three size groups of milk producers were categorized as small maintaining 1-2 milch animals, medium maintaining 3-4 milch animals and large who maintained five and more milch animals. A sample of 30 milk producing households was taken from each village. Thus, total samples of 120 households were drawn for the present study. Cost and returns concepts i. Fixed cost: Fixed cost includes interest on fixed capital and depreciation. The fixed cost was apportioned on the basis of Standard Animal Units (Patel, et al. 1983). ii. Variable cost: Variable cost includes feed cost, labour cost, veterinary cost and miscellaneous cost. iii. Total/ gross maintenance cost: It was obtained by adding all the cost components including Fixed and variable cost, i.e. Gross cost = Total Variable cost + Total Fixed cost iv. Gross returns: Gross returns were obtained by multiplying milk yield of an individual animal with respective prevailing prices of milk in the study area, i.e. Gross Returns = Quality of milk X Market prices of milk v. Net returns: Net return was calculated by subtracting net cost from gross returns, i.e. Net returns = Gross Returns - Net Cost Results and Discussions Herd size and operational land holding The distribution of milch animals across different household categories in the study area is given in Table 2. Overall average of milch animals on sample households was 3.51 per category. Among these milch animals, the number of cows per household was (1.04) while the number of buffaloes was more than two (2.47) across the sampled households. In small category the number of milch animals was 1.41 out of which the number of cows was less than one and almost one buffalo was maintained. In medium category, the average size of milch animals was more than three, out of which the number of buffaloes was more than two and almost one cow was maintained. In large category, the average size of milch animals was 5.13 of which 3.71 and 1.42 were buffaloes and cows, respectively. The size of land holding of sample producers was 5.64 ha and it increased with the size of milch animals on sample producer households. It was 2.38 ha in small category while in medium and large category the size of holding was 6.37 and 8.19 ha, respectively. Thus the study revealed that among the milch animals, buffalo was the major milch animals. Further, the higher number of milch animals maintained by the households of larger size category. Milk production milk production per milch cow and buffalo across various categories of household was found 5.80 and 6.36 litres per day, respectively as shown in Table 3. In different category the production of milk per cow increased with the size of herd. In small size of herds it was 5.43 and 6.14 litres per cow per day where as in large category it was 6.06 and 6.54 litres per day respectively. The milk production per cow in different seasons was almost same except it was a little lower in winter season while buffalo was higher in winter season and lower in summer season. The higher production of milk per buffalo in large category could be due to better feeding of green fodder and concentrates. In summer season per cow and buffalo milk production was 6.07 and 5.98 litres per day where as in rainy and winter season it was 5.81, 6.34 and 5.52, 6.77 litres per day, respectively. The higher production of milk during summer season could be mainly due to greater percentage of cows in milk during summers due to calving period. Singh et al (2011) have also reported similar finding while working in Varanasi district of U.P. He observed that 497

3 Table 1 Categorization of sample farmers Particulars Rewari Bawal Total Villages Karnawas Devlawas Salawas Kathuwas Categories (size of holding) Small (1-2 milch animals) Medium (2-4 milch animals) Large (5 and above) Total Table 2 Herd and, operational land holding size across various categories of households Particulars Milch Milch Total milch Size of land Area under fodder/ cows buffaloes animals holdings (ha) households (ha) Categories Small Medium Large Overall average Table 3 milk production per cow and buffalo (Litre/ day) Particulars Categories Cow Buffalo Small Medium Large Overall Small Medium Large Overall Rainy season Winter season Summer season Overall average 3.62 and 5.12 litres of milk per day were produced from buffalo in small and large category respectively. In case of cow he observed that average 3.03 and 4.0 litres milk per day produced from large and small category respectively. Maintenance cost The study revealed that maintenance cost of a cow and buffalo for a year was found Rs and (Table 4 and 5) of this total maintenance cost, 80 % was the variable cost. The rest of the cost was fixed cost which was accounted for about 20 % of the total maintenance cost. Among the different items of variable cost, feed and fodder cost constituted the major item of the cost which was about 70 and 65 % of the total maintenance cost. The next item of variable cost was labour, which was found to be 12 and 14 % of the total maintenance cost. The major items of the fixed cost were interest and depreciation on the value of the milch animals and accounted for about 11, 13.9 and 2 % of the total maintenance cost, respectively. The other items of fixed cost were interest and depreciation on buildings and machinery and implements, accounting for about 3 % and 2 % for cow and 5.5 % for buffalo, respectively of the total cost of maintenance. In various categories, the cost of maintenance of milch animals increased with the size of herd. In small category, cost of maintenance of a cow was Rs. 24,900. The same cost in large category was found to be more than Rs. 26,500. It was due to better feeding and maintenance of cows by large category. The percentage cost of feed and fodders of buffalo of the total maintenance cost was 63 % in small category while in medium and large category it was about 64 % and 68 %, respectively. [ Similarly while working out the maintenance cost of milking cow and buffalo Sharma and Singh (1994) observed maintenance cost of Rs , Rs , Rs and Rs , respectively for crossbred cow, local cow, graded- murrah buffalo and local buffalo. 498

4 These finding are also amply supported by Singh et al, (2011)]. Gross and net returns The results shown in Table 6 reveal that the average gross returns per cow were Rs However the gross returns per cow increased with the size of milk producing categories. In small category, the gross returns per cow were Rs and the corresponding figures in medium and large categories were Rs and Rs , respectively. The higher returns in large category were mainly because of greater number of cross-breed cows on larger herd sizes than smaller ones. For this reason, the net returns per cow too increased with the size of milk producing categories. The net returns per cow were found Rs in small category, while in large category the net returns per milch cow were as high as Rs [These finding are amply supported by Tripathi et al. (1986), Kumar and Singh (2007)] It is evident from the Table 6 that the gross and net returns per milch buffalo were Rs and Rs , respectively. The results indicate that the average gross returns per milch buffalo were much higher than in case of cow i.e. Rs Similarly, the net returns per milch buffalo were also found higher than the cow. In different categories, the gross as well as net returns are slightly higher in large category. The higher returns per milch buffalo in large category were mainly because of better feeding of feeds and fodders by them. [Similar findings were also reported by Rao (1986), Rao et al. (1991) and Kalra et al. (1994)]. Table 4 Annual maintenance cost per milch cow across different categories (in Rupees) Particulars Categories Small Medium Large Overall average Variable cost i Feed and fodder cost (69.62) (69.04) (68.26) (68.98) ii Labour cost (12.25) (12.33) (12.44) (12.34) iii Veterinary and service charges (0.70) (0.70) (0.66) (0.69) iv Miscellaneous cost (0.66) (0.67) (0.72) (0.68) Total Variable cost(i+ii+iii+iv) (83.23) (82.74) (82.08) (82.68) Fixed cost Interest on present value of cow (10.96) (11.22) (11.15) (11.11) Depreciation on present value (1.10) (1.12) (1.11) (1.11) Cost of interest on building (2.80) (2.94) (3.36) (3.03) Depreciation (0.28) (0.29) (0.34) (0.30) Repair and maintenance cost (0.06) (0.06) (0.07) (0.06) Machinery and Implements interest (1.35) (1.37) (1.60) (1.44) Depreciation (0.13) (0.13) (0.16) (0.14) Repair charges (0.08) (0.10) (0.12) (0.10) Total fixed cost (16.76) (17.26) (17.92) (17.31) Grand total of cost (VC+FC) (100.00) (100.00) (100.00) (100.00) Note: - Figures in parentheses are the percentage to the total maintenance cost. 499

5 Table 5 Annual maintenance cost per milch buffalo across different categories (in Rupees) Particulars Categories Small Medium Large Overall average Variable cost i Feed and fodder cost (64.85) (64.13) (68.86) (65.95) ii Labour cost (14.49) (15.01) (11.22) (13.57) iii Veterinary and service charges (1.17) (1.28) (1.30) (1.25) iv Miscellaneous cost (0.76) (0.58) (0.52) (0.62) Total Variable cost(i+ii+iii+iv) (81.26) (80.99) (81.89) (81.38) Fixed cost Interest on present value of buffalo (12.40) (13.48) (12.25) (12.71) Depreciation on present value (1.24) (1.35) (1.22) (1.27) Cost of interest on building (2.98) (2.32) (2.45) (2.58) Depreciation (0.29) (0.23) (0.240 (0.25) Repair and maintenance cost (0.050 (0.02) (0.03) (0.04) Machinery and Implements interest (1.53) (1.35) (1.60) (1.49) Depreciation (0.15) (0.13) (0.16) (0.14) Repair charges (0.09) (0.12) (0.14) (0.12) Total fixed cost (18.74) (19.01) (18.11) (18.62) Grand total of cost (VC+FC) (100.00) (100.00) (100.00) (100.00) Note: - Figures in parentheses are the percentage to the total maintenance cost. Table 6 Gross and net returns per milch cow and buffalo (in Rupees) Particulars Categories Cow Buffalo Small Medium Large Overall Small Medium Large Overall Total maintenance cost of cow & buffalo Gross return per cow & buffalo Net return per cow & buffalo

6 Conclusions The study concluded that the variable cost was the most important item of the total maintenance cost accounting for 80 % of the total cost in the study area. The fixed cost was accounted 20 % of the total cost. In the variable cost most important item of the total maintenance costs were feed and fodder cost accounting for 67 % of the total cost. In the fixed cost most important item of total maintenance cost was interest on the present value of milch animal was 11 % of the total cost. The gross and net returns per cow and buffalo were Rs , Rs , Rs and Rs respectively, it increased with the size of herds. Gross and net returns was higher in large category due to higher number of cross breed cows and better feeding of feeds and fodders than the other category. Acknowledgements The senior author is highly thankful to the College of Agriculture for providing necessary facilities for conducting this research project and the Professor & Head of the Department of Agricultural Economics, CCS Haryana Agricultural University, Hisar (India) for his guidance and support. References Anonymous, ( ) Annual report of animal husbandry and dairy development, Ministry of Agriculture, Government of India Ashalata P, Rao S, Reddy V V V, Moorthy P R S (2004) Impact of dairy cooperatives of milk production, consumption and marketed surplus pattern on the members. Indian Journal of Dairy Science, 57 (1): Duhan K V (2003) Marketing of milk in Rewari district of Haryana. M.Sc. Thesis. CCS Haryana Agricultural University Hisar, Haryana Kalra K K, Singh Rajvir, Chauhan A K (1994) Comparative economics of milk production in rural and urban areas of Haryana. Indian Dairyman, 46(12): Kumar S, Singh H L (2007) Economics of milk production in Panipat district of Haryana. Progressive Agriculture, 7 (1/2): Mudgal V D (2000) Sustainable milk production and productivity enhancement to match global competition. Indian-Dairyman, 52 (12): Rao B, Sambasiva (1986) Economics of dairy farming. Indian Dairyman, 38 (3): Rao B, Dayakar, Gourdhan R T, Singh C B (1991) Economics of buffalo milk production on Commercial dairy farms. Indian Journal of Dairy Science, 44 (1): 1-6 Saxena R (2000) Comparative advantage and competitiveness of the Indian Milk Sector. Working Paper Institute of Rural Management Anand, (142): 36 Sharma P V, Singh V R (1994) An economic analysis of milk production by different breeds of milch animals in humid- temperate zone of Himachal Pradesh. Indian Journal of Dairy Science, 47 (9): Singh K S, Agarwal B S, Singh R, Mondal B (2011) Economic analysis of milk production and disposal pattern of milk in Varanasi district of Uttar Pradesh. Indian Journal of Dairy Science, 64 (2): Sinha MN, Murthy HSR, Thakur D S (2002) A study of impact of membership of dairy cooperatives. Indian coop. rev 26: Tripathi RS, Garg JS, Singh GN (1986) An economic analysis of dairy enterprise in Bundelkhand region of Utter Pradesh. Indian Journal of Dairy Science, 39 (1): Vedamurthy R, Chauhan AK (2005) Economic analysis of milk marketing in Shimoga district of Karnataka. Indian journal of Agricultural Marketing, 35(1): Yogi RK, Chauhan AK, Sharma S P (2007) Economics of milk marketing in Jaipur district of Rajasthan. Indian Journal of Dairy Science 60(4):