For verification of this paper, please visit on http://www.socialresearchfoundation.com/innovation.php#8

During the 1950 and 1960 India was a milk deficit nation depending upon imports as the annual growth prediction trade was negative for several years. Annual compound growth rate in milk production during the to first decade after independence  was 1.64% which declined to 1.15% during 1960 with per capita consumption of 124gms per day. By 1970 the figures dropped to 107gms per capita per day.(PIB G-20 Government of India 07 Sept. 2022) it was one of lowest of the world and below the minimum recommended nutritional standards To cope with the situation NDDB was established in Anand in 1965 and operation flood was implemented in phase from 1970 to 1996 The main stress for developing dairy cooperatives, this  drive helped gradually and now India has become top milk producers globally with percentage share of 24% of the global annual milk production. In 2021-22 with the production of 221:06 million tonnes of the milk as compared to total global production being 921 million tonnes. Thus the per capita availability in our country was computed as 444gms per day while the global average per capita was 322gms per day only (2021) (PIB- Delhi basic AH Stat. 15 March 2023 and ministry of I.B.  01 June 2023).Out of the total production of India U.P. Contributed 33.01 of Million tones or 14.93 percent of it if specie wise contribution is seen buffaloes contributed 31.29% while the contribution of crossbred cow’s was 29%. Average yield during 2021-22 was computed as 5.96 kg for buffaloes, 8.52 kg for crossbred cows and 3.36 kg for local cow’s per animal per day. (Livestock prod. Stat. 2022)

Keeping in view the tremendous Contribution of U.P. this study was performed to draw important inferences for the potential investor in respect of both the sectors i.e, cooperative and non- Cooperative specifically in connection with cost of production per milch animal per day as well as per litre comprising of variable cost and fixed cost both. The major cost head against being a bifurcated amongst green fodder, dry fodder and condensates for feeding components and human labour Comprising family as well as hired labour as a while so that the investors may reach optimum component-mix for feeding as well as for labour also. The inferences drawn after the study are assumed to be helpful for the expansion of dairying activities  at large so that the production reaches newer  heights day by day in the shape of network extension.

Similar studies

Lakshmi priya et al (2022) - Cost of green fodder was computed for Rs 45.58 for local cow’s Rs 60.56 for crossbred cow’s and Rs 51.13 for buffaloes. Cost of  dry fodder was Rs 14.35 for local cow’s Rs 11.32 for crossbred cows and Rs 18.26 for buffaloes while the cost of concentrate was Rs 34.45, Rs 79.67 and Rs 36.85 respectively Labour cost for local cows was Rs 24.57,  for crossbred cows Rs 49.99 and Rs 30.26 for buffaloes per animal per day.

* Total variable cost including veterinary and miscellaneous cost was computed as Rs. 122.24 for local cows, Rs 202.80 for crossbred cows and 139.95 for buffaloes. Total fixed cost was Rs 21.30 for local cow’s, Rs 31.32 for crossbred cow’s and Rs 23.27 for buffaloes. Gross cost for local cows computed as Rs. 143.54 and  Rs 234.12 and Rs 163.82 for crossbred cow’s and buffaloes respectively. Net cost after deducting value of dung was Rs 139.93, Rs 227.94, and Rs 159.67 respectively for all the three species.  Average production was 4.22 lit, 10.86 litre, 5.02litre respectively. Cost per litre being Rs 33.13, Rs 20.99 and  Rs 31.84 for the three species. Thus return per litre was minus Rs 3.93, Rs 5.67 and Rs 3.30 for local cow’s, crossbred cow’s and buffaloes respectively.

George et al (2021) Through this study in respect of cows only total variable cost was registered as Rs 189.66/36.51 percent for small farmers, Rs.160.20/30.84 percent for medium farmers while Rs. 169.58/32.65 percent for large farmers. Total fixed cost was registered as Rs. 36.34/29.24 percent Rs. 37.94/30.52 percent, Rs.50.02/40.24 percent respectively for all the three categories. Gross return was computed as Rs. 237.35,  Rs 196.53 and  Rs 235.34 for all the three Categories.

Agrawal and Raju (2021) - Total variable cost for buffaloes was  Rs.164.51 with relative share of 88% of total cost, for local cow’s it was Rs 83.84/89.46 percent for crossbred cow’s it was Rs 176.36/90.75 percent. Total fixed cost was Rs 22.45/12.00 percent , Rs 9.87/10.54 percent and Rs 17.99/9.25 percent for buffaloes, local cow’s and crossbred cow’s respectively. Net returned were Rs. 58.44 for buffaloes Rs 6.88 for local cows while Rs 52.55 for crossbred cows per animal per day. Cost of milk production was Rs 31.85, Rs 30.74 and Rs 25.94 respectively per litre for all the three species.

Singh and Ali (2017)- Variable cost for buffaloes  was Rs 156.52 per animal per day with relative percentage 87.85 Comprising 18% for green fodder, 13.28% for dry fodder, 37.14% for concentrates 14.67% for  labour, 4.76% for miscellaneous expenses. For crossbred cows the total variable cost was Rs.144.16/85.59 percent component were percentage being15.29%, 13.19%, 36.60%, 15.79% and 4.72% respectively. For local cows the total variable cost was Rs. 83.54/80.20 percent with component wise  as 14.87%, 13.04% 30.67%, 15.93% and 5.69% respectively.

Total fixed cost were Rs 21.64/12.15 percent for buffaloes, Rs 24.27/14.41 percent  for crossbred cows and Rs 20.63/19.80 percent local cows. Total gross cost  per animal per day was thus Rs. 178.16 for buffaloes, Rs 168.43 for crossbred cows and Rs 104.17 for local cows. Cost of production per litre after deducting value of during was Rs 31.88 for buffaloes, Rs 23.71 for crossbred cows and Rs 28.32 for local cows.

Kumari et al (2020)- It was found out through the study that total variable cost was Rs 245.08/86.64 percent, Rs 87.25/83.03 percent,  Rs 194.85/87.01 percent for the species of crossbred cow’s local cow’s and buffaloes respectively Corresponding figures for total fixed cost were Rs 37.80/13.36 percent, Rs 17.83/16.97 percent  and Rs 29.08/12.99 percent for all the three species. Net cost per milch animal per day after deducting  value of during was computed as Rs 278.17 for crossbred cow’s, Rs 100.30 for local cow’s and Rs 218.81 for buffaloes. Cost per litre was thus computed as Rs 21.15, Rs 60.94 and Rs 35.24 respectively  for all the three species  with all the category combined .Return per litre was computed as Rs 5.36 for crossbred cow’s Rs minus 32.72 for local cow’s  and Rs 1.46 for buffalos.

The Primary data Collected from 240 milk producing household from the different villages Moradabad District of western U.P. Covering all the tehsils and all the  blocks so that the data represents the rural milk producing households of different holdings, education status and financial background. The data so collected was from 120 households of PCDF sector and 120 households of   Non PCDF sectors.  The data so collected was subjected to cost analysis in the shape of variable as well as fixed cost for milch animals computed on the basis of SAU’s. Yield per milch animals as well as total return on that basis were also associated and relative percentage table was also prepared for standardization.  

The following Methodology was adopted for the computation of the various cost components.

Variable cost

Feed and fodder 

Green fodder - Quantum of  green fodder fed as told by the households was valued at prevailing market rate in the  study area.

Dry fodder- Cost of dry fodder as reported by the producers was also computed on prevailing marked rate in the study area.

Concentrate - Cost per kg compound readymade concentrate and home made mixed concentrates were calculated at the prevalent market rate in the area.

Human Labour Cost -  Human labour cost included family labour and hired labour,. For evaluating the family labour and wages were imputed as per the prevailing wages rate of the area. The gross time utilized in all dairying operation through man, female and child labour was Converted into man-days. The weight assigned for the conversation of female/child labour into man equivalent were as under

2 males = 3 females.

1 male = 1.5 females

1 male = 2 children

Thus the total employed in all operation was computed among different breed of dairy animals on the basis of Standard Adult Unit (SAUs) in the animal  herd. Conversion coefficient used for formulation & SAUs suggested by Singh (1984) was adopted as under.

Buffalo in milk = 1 unit

Buffalo dry =0.4 unit

Local cow in milk = 0.7 unit

Local cow dry = 0.3 unit

Crossbred cow in milk = 1.4 unit

Crossbred Cow dry = 1.0 unit

Heifer = 0.5 unit

Young stock = 0.2 unit

 (Male & Female)

Draught dairy animal = 0.5 Unit

Veterinary cost – Veterinary cost was ascertained by including natural services, artificial insemination vaccination medicine and health care of the animals, as per market cost of these services.

Miscellaneous Cost  

a-  Electricity and water cost- Bills of this head were being paid monthly by the respondent and expenditure thus recoded was allocated animal wise of the different species.

b-  Minor repair cost - The recurring expenses incurred on the repair of the cattle shed and implements of equipments was computed on actual expenses basis calculated per milch animal per day.

c- Others - Expenditure of ropes, chains, pails, grazing charges detergents and chemicals were all included on actual bill basis and divided accordingly.

Fixed Cost

1. Depreciation on cattle shed - Depreciation under this cost component was calculated at the rate of 2.5 % per annum for pakka shed, 5.0% per annum for Semi Pakka shed and 20%, per annum for Katcha shed assuming their useful life as 40 years, 20 years and 05 Years respectively.

2. Depreciation of  dairy equipments - Under this head the depreciation on dariy equipment like chaff Cutter, water-troughs, milking cans and other utensils was worked out at the rate of 10% per annum on the cost price assuming their life as 10 years.

3. Interest on Capital - Interest on the capital arranged/obtained for the building of Cattle shed, dairy equipments and cost of animals was calculated at an average bank interest rate of 10% per annum.

Returns from dung gunny bags - The quantum and value of dung of the dairy animals and the price and number of gunny bags were recorded by personal enquiry from each the household and the returned realized was detected while computing total cost per litre.

3. Cost of Concentrate -  For the specie of  buffaloes, the cost  of this component per milch animal per  day was recorded as Rs 50.54 per milch animal per day while the corresponding figure for the species of local cow’s and crossbred cow’s were Rs.34.02 and 61.39 respectively. The trend in between all the categories for all the three species reflected that the coat of this component escalate drastically with the advancement of holding size. The range being  Rs 27.16 to Rs 87.36, Rs 24.36 to Rs 44.24 and  from Rs 34.65 to Rs 96.60 respectively for the species of buffaloes local cows and crossbred cow’s. The analysis confirmed that the holding size of categories size advances more and more heed is paid towards concentrate for the shake of better yield and fat percentage as well as return simultaneously. Thus total feed cost per milch animal per day was computed for all the three component together as Rs 131.11, Rs 100.10 and Rs 138.74 respectively for the species of buffaloes, local cow’s and crossbred cow’s. The exercise also revealed to our utter surprised that the feeding  cost in case of species of crossbred  cow’s is higher even in comparison to buffaloes may be due to sensitivity or more production.

4. Cast of total labour – For the species of buffaloes, family as well as hired labour cost clubbed per milch animal per day was recorded as Rs 35.98. The corresponding figure for the species of local cow’s and crossbred cow’s were Rs 20.86 and Rs 62.30 respectively. The category-wise trend reflected was that labour cost trends to reduce with the advancement of category barring the category of small farmer in respect of species of local cows only. We owe astonished to observe that there is very drastic variation in this component of cost in between the species- as up keep of Crossbred cow invites more care and maintenance as compare to buffaloes even. One more fact found out was that the category of landless laboure and marginal farmers did not resorts to hired labour for all the three species,  In other words first two Categories manage the herd with family labour only.

5. Cost of Veterinary – In case the species of buffaloes this cost was registered as Rs 2.24 per milch animal per day and for the species of local cow's and crossbred Cow's the figures were Rs 0.84 and Rs 2.38 respectively. Category-wise trend reflected for all the three species was very clear that this component of cost trends to rise with the advancement of category in respect of all the three species. Here too it was established that for the species of Crossbred Cow's this cost is the highest followed by the species of buffaloes while the lowest for the species of local cow's.

6. Cost of Miscellaneous - For the species of buffaloes, this cost was registered as Rs 3.15 per milch animal per day while the corresponding figure for all the species of local cow’s and crossbred cow’s were Rs 2.24 and Rs 3.36 respectively. The trend observed was that this cost trends to reduced marginally with the advancement of category or herd size as the denominator is higher. This total variable cost per milch animal per day clubbing all the component  was computed as Rs 172.48 for the species of buffaloes Rs 124.04 for the species of local cow’s and highest for the species of crossbred cow’s i.e, Rs 206.78. Category wise trend was also matching with holding size generally.

Fixed Cost

1. Depreciation on Cattle shed - For the species of  buffaloes this cost  was registered as Rs 4.62 per milch  animal per day for the pool of all the five categories. The corresponding figures for the species of local Cow’s and crossbred cow’s were Rs 4.20 and R 4.13 respectively. The trend over here observed was that this cost clearly reduces along the size of herd or advancement of category. This component of cost is highest in case of the species of buffaloes while virtually identical in case other two species due to the fact that the species of  buffaloes is more  prone to wear and tear etc.

2. Depreciation of dairy equipments- This component cost in case of the species of buffaloes was registered as Rs 1.82 per milch animal per day while corresponding figures for the species of local  cows and crossbred cow’s were Rs 1.82 and Rs 2.03 respectively. The trend in between the categories observed was this costs trends to rise initially for first three categories and then is reduced according to the holding size. This cost also was the highest for the species of crossbred’s cows.

3. Interest on fixed Capital-  For the species of the buffaloes this cost was registered as Rs 35.56 per milch animal per day while the corresponding figures for the species of local cow’s and crossbred cow were Rs 22.26 and Rs 34.23 respectively. No concrete trend was of course observed regarding this component of cost in between the categories.

Thus total fixed cost per milch animal per day for the species of buffaloes was registered as Rs 42.00 per milch animal per day while the corresponding figure for local cow’s and crossbred cow’s were Rs 28.28 and Rs 40.39 respectively.

If we go for Clubbing variable Cost and fixed cost i.e  gross cost in case of per milch animal per day for the species of buffaloes was computed as Rs 214.48, corresponding figures for local cows and Crossbred cows were Rs 152.32 and Rs 247.17 respectively. For more precision value of dung and gunny bags was also calculated and the same was Rs 9.87 for buffaloes Rs 7.35 for local Cows and R. 8.89 for crossbred cows. Deducting the return from the sale of dung and gunny bags, the total net cost per milch animal per day was reached as Rs 204.61 for buffaloes, Rs 144.97 for local cows while Rs 238.28 for crossbred cows.

Average milk production per milch animal per day for the species of buffaloes was registered as Rs 5.41 litre, the range in between the categories being Rs 4.24 litre to 7.15 litre with clear higher trend along with holding size. In case the species of local cows the production for the pool of the category was 3.45 litre and the range was from 2.92 litre to 4.16 litre showing positive trend here too with the advancement of the holding size.

 For the species of crossbred cows the average production for all the five categories was registered as 8.58 litre per milch animal per day. The range being 7.16 litre to 11.00 litre here the category of marginal farmers shown up as an exception as the production in their case was registered 7.16 litre per day while the case of landless labour it was 7.44 litre per day Average prise of milk in case of the species of buffaloes was registered as Rs 64.61 per day for the species of local cow’s and crossbred cows the corresponding figures were 55.09 and Rs 56.77 litre. Price variation in between the categories was virtually not cognizable. The gross returns including the returned from dung and gunny bags was thus computed as Rs 359.45 per millch animal per day in case of the species of buffaloes. The corresponding figures for local cows were Rs. 197.40 and for crossbred cows were Rs. 495.95. The category-wise trends observed under all the three species that bigger the holding, higher the return per milch animal per day.

Net return after deducting gross cost from  gross return was  Rs 144.97 for the species of buffaloes, Rs 45.08 for the species of local cows and Rs 248.78 for the species crossbred cows, with the trend of steep upwards graph with the advancement of the category. The result also proved that rearing of crossbred cow's for commercial purpose was most profit sum followed by the species of buffaloes and the least viable in the case of the species of local cows.

The Net cost per litre on the basis of above analysis was computed as Rs 37.82 for the species of the buffaloes  for all the categories put together. The corresponding figure for cow’s were Rs 42.02 per litre and Rs 27.77 per  litre for the species of local cow’s and Crossbred cow’s respectively. Thus the analysis dictate that keeping view the yield per millch animal per day the net cost per litre is the lowest  in  case of crossbred cow's while the highest in case  of local cows categories –wise analysis for net cost per litre has also given very surprising result as the category wise cost for the species of buffaloes was Rs 43.32, Rs 42.80, Rs 36.82, Rs 31.91 and Rs 32.34 respectively for all the five categories.

The Corresponding figures were local cow’s were Rs 46.94, Rs 47.63, Rs44.51, Rs 39.64 and Rs 34.73 respectively for all the five Categories. For the species of cross bred cows the figures were Rs 28.40,  Rs 32.32, Rs 29.52, Rs 24.78 and Rs 22.63 for all  the the categories of respectively. The figures ofcourse are sufficient to beat any potential investor as their is strong negative correlation in between the net cost per litre for Categories with the advancement of holding size.

Component wise relative share percentage equivalent analysis for all the three species  

 After analyzing the data on the basis of absolute figures in Rupees. The whole data Component-wise species-wise and category-wise was subjected to be converted in the relative share percentage for standardization as the absolute figures are subject to change due to efflux of time. The results matched fetched were as under.

1. For the species of buffaloes, total variable cost for all the five categories combined was a registered as 80.42% of the total cost, in case of the species of local cow's, the figures was 81:43% while for the species of crossbred cow’s it was 83.66% In between the categories, the range for the species of buffaloes was from 77.46%. to 83.33% Corresponding figures for local cows were from 78.51% to 85.26% and for crossbred Cow's were from 80,84% to 85.31 as such no firm trend with respect to the size of holding was observed. If we go for component wise broader heads relative share in case of the species of buffaloes, total feed Cost was registered at 61.13%, total labour cost 16.78%, veterinary cost 1.04% and miscellaneous cost 1.47%. The figures for local cow's on the same order were 65.72%,13.69%, 0.55% and 1.47% and for crossbred cow's ,the figures were 56,13%, 25,20%, 0.96% and 1.36%. The analysis revealed that feeding cost share was the  lowest in case of crossbred cow's while virtually same in other two species. As far as human labour share is concerned it was the highest for the species of crossbred cows followed by buffaloes and the least for the species of local cow’s implying that the species of crossbred cow’s requires more human labour due to its sensitivity and more yield as well. The veterinary cost was registered highest for the species of buffaloes the relative share being 1.04% followed by crossbred cows i.e, 0.96% and the least i.e, 0.55% for the species of local cows. Miscellaneous cost registered was 1.47% for both the specis of buffaloes and local cows but marginal lower i.e, 1.36% in case of crossbred cow’s. Under the human labour component It was also found out that the first two categories do not resorts to hired, labour for all the three species. Another trend depicted that the human labour cost trends to decrease with the size of holding and the contrary feeding cost trends to escalate due to better composition of ingredients and ofcourse resultant better yield as well.

The relative shore percentage of fixed cost comprising of depreciation on Cattle shed, depreciation on dairy equipments, and interest on Capital was registered as 19.58% for the species of buffalos 18.57% for the species local cow’s and 16.34% for the species of crossbred cow’s. Category wise analysis revelead that fixed cost generally trends to be lower as the size of the holdings advances. This is natural also with the rise of denominator  over all it was informed that total fixed cost for all the categories and all the species ranges between 14.69% to 22.54% white total variable cost ranges between 77.46% to 85:31% so we can say that in dairying units fixed cost is about 20% on an average i.e, one-fifth of the total project cost rest 80% approximately varies with the size of land holdings or size of the herds so any entrepreneur should opt for the optimum herd size as per his/her a resources / capabilities.

1.  Agrawal Aditi and Raju R (2021) - Economic of milk production in Malwa and Kymore zones of Madhya Pradesh Haryana veterinary (Dec. 2021) 60(2), 170-175.

2. George Sabin, saseendran P.C, Anil K.S. Gleeja V.L. Benjamin E.D, Pramod S and Aslam Muhmmad M.K. (2021)-  Cost and return of milk production under different types of dairy farms in kerala. Journal of Animal Research Vol.11, No.6 1105-1109 Dec. 2021.

3. Kumari Binita, Chandel B.S and Lal Priyanka (2020)  -  Economics analysics of milk production in eastern region of India. Indian J. Dairy sci. 73(5) 449-456.

4. Lakshmi Priya, Patibandla, Sinha D.K, Singh K.M., Singh R.P. and Ahmed Nasim (2022) -  Economics analysis of milk production, Study of South India. Economic Affairs, Vol 67, No.05, pp 711-720 Dec 2022.

5. Livestock Production Statistics of India 2022- Vet-extension 24 April 2023

6. PIB- Delhi, Basic Animal Husbandry Statistics 2022 – Ministry of Fisheries, Animal Husbandry & Dairying. Posted as 15 March 2023 5:52Pm by PIB Delhi.

7. PIB-G20 - Press information  Bureau Govt. of India Azadi ka Mahotsav G-20 Milk Production of India Ministry of Fisheries, Animal Husbandry & Dairying Posted at 07 Sept. 2022, 11:41am.

8. Ministry of information and broadcasting - G-20 Largest producer of milk in the world posted 01 June 2023, 6:29 Pm PIB Ahmedabad.

9. Singh Kulwant (1984) – A Economic analysis of dairy enterprise with optimum combination of crop cultivation and milk production of Haryana state Ph.D Thesis Meerut University Meerut.

10. Singh Priyanka and Alli Miraj (2017) -   Cost benefit analysis of milk production in Ballia District  of U.P. Indian Journal of Economics  and Development 13(4),779-784.