Study of Milk Cost Production in Buffaloes of Telangana State

Dairying in India is closely knitted as an integral part of agriculture, playing an indispensable role in the upliftment of rural poor. Indian livestock production systems are characterized by low inputs and low yields. Landless, marginal and small farmers own about 68.00 per cent of livestock and contribute largely to the livestock economy. Apart from ensuring nutrient supplies to the families owning dairy animals, dairy sector also offers promising employment opportunities and economic returns on a regular basis.
       
Dairy sector is an important source of secondary income for over 80-90 million milk producers in the country. Cattle and buffalo production systems are still largely traditional based and are giving way to the organized and commercial production systems wherein quality and profitability are given due importance. In spite of traditional based dairy farming, the dairy sector in India has grown substantially over the years with an annual growth rate of above 4.00 per cent.
       
India ranks first among the world’s milk producing nations since 1998 and has the largest bovine population in the world. Milk production in India during the period 1950-51 to 2019-20, has increased from 17 million tons to 198.4 million tonnes as compared to 187.7 million tons during 2018-19 recording a growth rate of 5.70 per cent. The per capita availability of milk in the country which was 130 grams per day during 1950-51 has increased to 406 grams per day in 2019-20. This represents sustained growth in the availability of milk and milk products for growing population (DAHD and F, GoI, 2020).
       
Telangana, the youngest state in the country stands at 8th position in livestock population with a population of 34.18 lakh milch animals including exotic, crossbreed and indigenous cows and buffaloes compared to 28.97 lakhs in 2014-15. Telangana state stands 13^th position in milk production with 5.61 MT of milk production during 2019-20 as compared to 4.2 MT in 2014-15. A majority of the milk produced in the state is being procured by the private dairies. As against the daily sale of milk to the tune of 22 lakh litres in the state, the four cooperative dairies under the Telangana State Dairy Development Cooperative Federation Limited.
       
So having adequate data on cost of milk production in different sized farms in cows and buffaloes will enable policy makers to arrive at a minimum support price for milk, so that the farmer will not be put to loss.

Cost of milk production was estimated by taking the inputs and outputs into account. An investigation was carried out to study the cost of milk production in buffaloes of dairy farmers in Karimnagar, Khammam and Rangareddy districts of Telangana from June to August of 2022. The data was collected from 240 farmers spread over 24 villages in 6 mandals in the selected districts. The 240 respondents were interviewed as per the questionnaire. The information was elicited through interaction and by posing the questions present in the interview schedule and the information given by the farmer was taken into account for this purpose. The cost of inputs was taken by considering the fixed costs and variable costs involved.
       
For the estimation and calculation of various costs, the following methodology was used.
 
Fixed cost
 
Fixed cost was taken as the expenditure which was incurred whether or not the production was carried out. It included interest on fixed capital and depreciation value. The components of fixed cost were as following.
 
Interest on fixed capital
 
The interest on fixed capital was worked out at the prevailing rate. This amount was taken into consideration by calculating the total interest to be paid divided by 365 to arrive at the interest per day.
 
Depreciation on fixed capital
 
Depreciation was taken as the loss in the value of an asset as a result of the use, wear and tear, accidental damage and time obsolete. It was worked out for milch animals (10%), animal shed (2.5%), machinery and equipment (2.5%) keeping in view the present value and lifetime. This amount was arrived at by dividing the total amount of depreciation per annum by 365 to arrive at the depreciation amount per day.
 
Variable cost
 
Variable costs were taken as those costs which were incurred on the variable factors of production and which varied on day-to-day basis. It included feed cost, labour cost and miscellaneous cost. The variable expenses on dry fodder, green fodder, on concentrate feed, labour and miscellaneous were collected per individual milch animal as per the information given by the famer and also by personal observation on the day of visit.
 
Feed and fodder cost
 
The information on the quantity of dry fodder, green fodder and concentrate fed to milch animals was recorded on the basis of farmer’s input regarding the intake of individual animals. The jowar and maize varieties were fed to animals as a green fodder. The dry fodder available was paddy straw, jowar kutti, ground nut crop residue. Concentrates were fed to the dairy animals, being the major source of meeting the nutrient requirements and the concentrate mixture was prepared by the farmers themselves from the ingredients procured by themselves. The rates per kg of green, dry fodder and concentrates were arrived at as per the information given by the farmer and also by cross-checking with the local market through animal husbandry official.
 
Labour cost
 
It included cost of family as well as paid labour (hired labour). The cost of hired labour was calculated considering type of work allotted and wages paid whereas, family labour costs were determined on the basis of existing market rate of farm labour. The number of man hours of labour engaged per day was converted into monetary terms by multiplying with the corresponding wage rate.
 
Miscellaneous cost
 
Miscellaneous cost included the cost of breeding for AI or service charge of bullas well as cost of vaccination and medicines. They were calculated on the basis of per milch animal per day for different milch animals kept by the household. The cost incurred_as informed by the famer was taken into consideration. The amount was arrived on per animal basis.
 
Other cost concepts used
 
Gross cost
 
It was obtained by adding all the cost components including fixed and variable costs, i.e;
   
Income from dung
 
For value of dung, rough estimate of dung voided by animal per day was taken as 30 kg fresh and calculated per year and finally divided by 365 to arrive at the per day value after removal of 60% of moisture. The total income from dung of all the milch animals was taken to arrive at the average value.
 
Net cost
 
The net cost was worked out by deducting the imputed income earned through sale of dung, from the gross cost, i.e;
   
Gross returns
 
Gross returns were obtained by multiplying milk yield of an individual milch animal with respective prevailing sale prices in the study area, i.e;
   
Net income
 
Net income was calculated by subtracting net cost from gross returns, i.e;
   
Sale price of milk
 
The price of milk was taken as per the information given by the farmer.
       
In order to estimate the cost of milk production, the average net cost per animal per day was divided by average milk yield of animal per day, i.e.,
  Where,
X₁= Cost of green fodder per day per animal.
X₂= Cost of dry fodder per day per animal.
X₃= Cost of concentrates per day per animal.
X₄= Labour cost per day.
X₅= Miscellaneous cost per day per animal.
VD= Income from dung (Arrived figure per day per animal).
TNMC= Total net maintenance cost or net cost.
TM= Average quantity of milk produced per day per animal  in litre.
 
Benefit-cost ratio
 
In order to look from the angle of input and output the following formulae was used to calculate the Benefit-cost ratio.
 
Where,
R = Sale price of milk sold per litre.
C = Cost of milk production per litre.

A perusal of the Table 1 revealed that the average depreciation cost and interest on fixed capital was Rs.14.71 (6.44%) and Rs.18.51 (8.41%) respectively. Comparing farms of different herd size categories, it was found that total fixed cost was highest in case of large farms (15.85%) followed by medium (14.22%) and small farms (13.44%). The reason for this may be due to more investment in building infrastructure like building sheds, purchase of animals and equipment in case of large farms. The average quantity of green, dry and concentrate fed per animal per day was 22.21, 9.43 and 3.43 kg, respectively and average cost of green, dry fodder and concentrates in the studied areas were Rs.1.32, Rs.3.92 and Rs.29.98 respectively. Regarding the costs, total fixed cost, average total feed cost, total variable cost per animal per day was found to be Rs.33.22, Rs.168.55 and Rs.194.95 respectively.
 

       
The study revealed that feed cost was the major cost components in total variable cost accounting 73.87 per cent followed by labour cost (8.83%) and miscellaneous cost (2.73%). Total feed cost (73.87%) was the major cost components in total variable cost which is mainly due to high cost of concentrates.                    
       
This finding is in consistent with the earlier studies carried out by (Sandeep, 2012; Manjunatha, 2014; Singh and Datta, 2016; Jadav et al., 2016; Vishwas, 2016; Kalyani, 2018 and Sandeep, 2020). Total feed cost was minimum in case of large farms (71.27%), followed by medium (74.22%) and small farms (76.46%). Among the feed costs concentrates was the major cost component constituting of about 44.89 per cent on an average followed by dry fodder and green fodder accounting 16.01 and 12.91 percentages respectively. Concentrate was having highest share of costs due to their higher market price. This is consistent with the earlier studies carried out by (Sharma, 2013; Singh and Datta, 2016; Jadav et al., 2016; Vishwas, 2016; Kalyani, 2018; Acharya and Malhotra, 2020 and Sandeep, 2020). Costs for green fodder were followed by dry fodder. The fixed costs and variable costs constituted 14.55 and 85.44 per cent, respectively.
       
Labour was hired in case of large and medium farms on monthly basis which was converted to per day per animal basis whereas small farms used family labour and it was worked out at prevailing hired labour cost. Labour cost was found to be highest in case of large farms (10.20%), followed by medium (8.80%) and small farms (7.20%). It was found that miscellaneous cost is very low in all herd size.
       
Perusal of Table 2, revealed that total net cost was found highest for large farms (Rs.237.46) followed by medium (Rs.220.92) and small (Rs. 207.10) farms. These findings were greater than findings of Sharma (2013) who reported that net cost was Rs. 197.90, Rs. 220.15, Rs. 226.85 in small, medium and large herd size respectively. Average net cost in the study area was found to be Rs. 221.84. This finding is greater than that reported by (Mankar, 2003; Das, 2004; Desai, 2005; Singh, 2006; Singh, 2008; Sharma, 2013 and Jadav et al., 2016).  Due to higher fixed cost and total variable cost, large farms were having higher net costs. The income from dung was highest in large farms (Rs. 8), followed by medium (Rs. 6) and small (Rs. 5) farms. Average income from dung was Rs. 6.33.
 

       
Average net income from buffalo was Rs.55.31. Comparing across different herd size categories, it was observed that higher net income from buffalo was obtained in case of large farms (Rs.69.84), followed by medium (Rs.54.33) and small farms (Rs.42.35). In case of large farms higher milk productivity of the animals by performing better dairy management practices leads to higher net returns.
       
Average cost per litre of milk production was Rs.41.15/lit. This finding was greater than the findings of (Singh, 2008; Thakur, 2010; Khoveio, 2012; Sharma, 2013; Manjunath, 2014; Sharif, 2014; Singh and Datta, 2016; Jadav et al., 2016; Kumawat et al., 2016; Kalyani, 2018; Manish, 2020 and Kumar, 2021). It was found that cost of milk production per litre was highest in case of small farms (Rs.42.20/lit) followed by medium farms (Rs.41.29/lit) and large farms (Rs.40.11/lit). This shows cost of milk production varied negatively with the herd size due to the economics of scale of dairying. The profit /litre of milk was highest in case of large farms (Rs.11.79), followed by medium (Rs.10.15) and small farms (Rs.8.84). These findings are greater than findings of (Sandeep, 2012 and Sharma, 2013) and less than findings of (Manish, 2020). Considering this the average profit/ litre of milk was calculated as Rs.10.24/lit. This finding was greater than findings of (Singh, 2008; Manjunatha, 2014; Acharya and Malhotra, 2020) and less than the findings of (Sharma, 2013; Kumawat et al., 2016; Kalyani, 2018 and Sandeep, 2020). Average milk yield and milk price of the study area was 5.39 litres and Rs.51.42/lit.
       
The average Benefit-cost ratio was found to be 1.24. This finding was less than the findings of (Kumawat et al., 2016; Vishwas, 2016; Neelum and Khan, 2017; Kalyani, 2018; Sandeep, 2020 and Kumar, 2021) who found that the Benefit-cost ratio was 1.58, 1.52, 1.43, 1.47 and 1.97 at average level respectively. Comparing different herd size, it is found highest in case of large farms (1.29) followed by medium farms (1.24) and small farms (1.20). This finding was lower than the findings of (Manish, 2020). Analysing the Benefit-cost ratio indicates that large farms are profitable than medium and small farms.

It is concluded that the average gross cost and average net cost was found to be Rs.228.17 and Rs.221.84 respectively. Average milk production per day per animal, sale price of milk per litre was 5.39 lit, Rs.51.42 respectively. Average cost of milk production per animal per day was Rs.41.15. It was found that cost of milk production per litre was highest in case of small farms (Rs.42.26/lit), followed by medium farms (Rs.41.29/lit) and large farms (Rs.40.11/lit). Average net income from buffalo was Rs.55.31. Comparing across different herd size categories, it was observed that higher net income from buffalo was obtained in case of large farms (Rs.69.84) followed by medium (Rs.54.33) and small farms (Rs.42.35). Profit /litre of milk was highest in case of large farms (Rs.11.79), followed by medium (Rs.10.15) and small farms (Rs.8.64). Average profit/litre milk produced was found to be Rs.10.24. Benefit-cost ratio found highest in case of large farms (1.29) followed by medium farms (1.24) and small farms (1.20). Average Benefit-cost ratio was found to be 1.24.

All authors declare that they have no conflicts of interest.