Research Article

Production
Economics of Milk Production and its
Constraints in Nagaland
L.L. Michael Khoveio 1, D.K. Jai...
Economics of Milk Production and its Constraints in Nagaland

studies have been carried out on cost and
returns from milk ...
L.L.Michael Khovelo et al.

prevailing prices in the study area while net
return was calculated by subtracting net cost
fr...
Economics of Milk Production and its Constraints in Nagaland

Table 1: Maintenance Cost and Returns per milch crossbred co...
L.L.Michael Khovelo et al.

Table 2: Maintenance Cost and Returns per milch Local Cow
(Rs./animal/day)
Cost component
Vari...
Economics of Milk Production and its Constraints in Nagaland

Table 3: Production constraints
Constraints

Members

Non-me...
L.L.Michael Khovelo et al.

M.V.Sc. Thesis, NDRI (Deemed University), Karnal,
India.
Manoharan, R. Selvakumar, K. N. Pandi...
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  1. 1. Research Article Production Economics of Milk Production and its Constraints in Nagaland L.L. Michael Khoveio 1, D.K. Jain2 and A.K. Chauhan2 National Dairy Research Institute, Karnal-132001 (Haryana) This study was undertaken to determine the cost and returns from milk production and to identify the various constraints in milk production and marketing. The study was conducted in the Kohima and Dimapur districts of Nagaland state. Primary data was collected during 2010-11 from 120 milk-producing households. Tabular analysis was employed to work out the cost and returns from milk production while Garrett's Ranking Technique (GRT) was used to identify the major constraints in milk production and marketing. The overall average net maintenance cost per day for crossbred and local cows were worked out to be Rs. 80.46 and Rs. 41.04, respectively. The average daily milk yield of milch crossbred and local cows was 4.34 litres and 1.47 litres, respectively. The average costs of milk production for crossbred milch cows and local milch cows were Rs 18.52 and Rs 28.15 per litre, respectively. The net returns was found to be positive for crossbred cows while it was negative for local cows across all the categories of households. The constraints were studied separately for cooperative members and non-members. Low availability and high price of concentrate was the major production constraint in both member and nonmember households followed by lack of availability of green fodder. Low price of liquid milk was found to be the major marketing constraint among the cooperative members while delay in payment by unorganized sector was the major constraint in case of non-members. Keywords: Maintenance cost, milk yield, crossbred cows, local cows, net returns, constraints, cost of milk production INTRODUCTION L ivestock sector in India has emerged as an important sector for employment generation as well as providing a stable source of income. With the launching of Operation Flood in 1970 and other dairy development programs, India has now emerged as the single largest milk producing country in the world where milk production grew by 4.22 per cent from 80.6 million tonnes in 2000-2001 to 121.8 million tonnes during 201011. Consequently, the per capita per day availability of milk in India has increased from just 120 grams (g) in 1960 to 281 g in 2010-11, thus meeting the minimum nutritional requirement of 250 g as recommended by the Indian Council of Medical Research. Though dairy development programmes have been taking place throughout the country yet the situation in the North Eastern states is not that encouraging. The setting up of Kohima District Cooperative Milk Producer's Union Limited (KOMUL) and KOMUL milk plant (10,000 litres per day capacity) 1 2 in Kohima district during the second phase of Operation Flood Programme (OF) in 1985-86 and the introduction of centrally sponsored schemes Intensive Dairy Development Programme (IDDP) during 1993-97 has made a significant impact on milk production in the state of Nagaland. Maximization of profit using limited resources is the main motive in any enterprise. Thus, the success of any enterprise will be based on the extent of its profitability where milk production is no exception. Milk yield is the main output which has economic significance ultimately bringing returns to the milk producers in dairy enterprise. Hence, estimation of costs and returns from milk production for different milch animals maintained by different sample households is very essential. Moreover the understanding of the various constraints faced by the dairy farmers which are the ground realities can help policy makers in identifying the avenues for enhancing the milk production in the state. Though a large number of research M.V.Sc Scholar, DES&M Div. NDRI, Karnal-132001, (Haryana) Principal Scientist, DES&M Div. NDRI, Karnal-132001, (Haryana) 2012-086 Received:June 2012; Accepted:December 2012 520
  2. 2. Economics of Milk Production and its Constraints in Nagaland studies have been carried out on cost and returns from milk production yet no relevant information is available in case of Nagaland. Keeping in view the gap in information, the present study was carried out in the state of Nagaland. METERIALS AND METHODS Sampling plan : The study is based on a sample survey conducted in 2010-11. Out of the eleven districts of Nagaland, Kohima and Dimapur districts were selected out of which a cluster of villages were selected randomly from which 30 sample households were selected randomly. Kohima and Jakhama blocks were selected from Kohima district and Dhansiripar and Medziphema blocks were selected from Dimapur district. Thus, a sample of 120 households was drawn for the present study.The selected sample households were post stratified using the cumulative square root technique with milch animal as the basis of classification. The household were thus categorized into three herd size categories namely small (1-2 milch animals), medium (3-4 milch animals) and large (>5 milch animals). Thus, the distribution of 120 households was 38, 64 and 18 households for small, medium and large herd size categories, respectively. THE DATA The study is based on primary data collected by survey method through personal interview of the head of households. The data on various aspects on family size and composition, education of head of the family, land holding, herd size, type of animals and their value, dairy equipments, cattle shed along with their present value and expected life, quantity of feeds and fodders fed to animals along with their prevailing prices, family and hired labour used along with prevailing wage rate, veterinary and miscellaneous expenditure were collected. The information on milk production and its selling price and disposal pattern was also collected. Besides this, data on various production and marketing constraints faced by the dairy farmers was also collected. ANALYTICAL FRAMEWORK (a) Tabular Analysis Tabular analysis was employed to work out the cost and returns from milk production. The total cost comprised of two components viz. fixed cost and variable cost. Fixed costs: Fixed costs are that expenditure which are incurred whether or not the production is carried out. It includes interest on fixed capital and depreciation on buildings, cattle shed machinery/equipments and milch animals. The depreciation for milch animals was taken as 8 per cent assuming productive life of 12.5 years for crossbred cows and 10 per cent assuming productive life of 10 years for local cows. Depreciation was calculated using straight line method. The depreciation on cattle shed, manger, milking cans, utensils and other instruments were calculated as per productive life of the individual equipment. Variable Costs: Variable costs are those costs which vary with the level of production and can be altered in the short run. It includes feeds and fodder cost, labour cost, veterinary cost and miscellaneous costs. The cost of green fodder, dry fodder and concentrate were worked out by multiplying the total quantities fed with their respective prevailing prices in the study area. The labour cost included both family and hired labour. The hired labour was calculated considering type of work allotted and wages paid. In case of family labour, the imputed value was obtained depending on the time spent in performing various dairy activities and the prevailing wage rate of casual labour in the study area. The veterinary cost included cost of Artificial Insemination (A.I.), vaccination and medicines incurred on the animal during the period of one year. Miscellaneous costs such as cost of electricity, water charges, fuel etc. were calculated on the basis of per milch animal per day for different types of milch animals kept by the sample dairy farms. Gross cost was obtained by adding all the cost components including fixed and variable costs while net cost was worked out by deducting the imputed income of dung from the gross cost. The cost per litre of milk was obtained by dividing the average net maintenance cost per animal per day by average milk yield per animal per day. Returns from Milk Production: Gross returns were obtained by multiplying milk yield of an individual animal with respective 521 Indian J. Dairy Sci. 65(6), 2012
  3. 3. L.L.Michael Khovelo et al. prevailing prices in the study area while net return was calculated by subtracting net cost from gross return. Constraints in milk production and its marketing In order to study the constraints, a schedule was developed in accordance with the available literature. Accordingly, constraints were identified and sub-divided into production and marketing constraints and thereafter the response of the sample households were recorded. Various questions that were formulated relating to production and marketing constraints included availability of green fodder and concentrate, knowledge of balance feeding, availability of veterinary facilities, incidence of tick/worms or parasitic infestation, lack of awareness on animal health care, training facilities for scientific dairying, mode of insemination, heat detection, incidence of reproductive disorder, repeat breeding and marketing constraints such as lack of regulated market and milk cooperatives, delay in payment by unorganized sectors, distantly located milk collection centre, low price of liquid milk etc. The ranks given by the respondents were then converted into percentage position with the help of formula 100 (Rij - 0.5) Percent position = ------------------------------Nj Where, Rij = Rank given to ith constraint by jth individual Nj = Number of constraints ranked by jth individual The per cent position of each rank thus obtained was converted into scores by referring the table given by Garrett. Then for each reason the scores of individual respondents were added and divided by the total number of respondents. Thus the mean score for all the constraints were arranged in descending order and then rank were assigned to individual constraints. RESULTS AND DISCUSSION Cost and Returns from milk production In any enterprise, profit is the main motive of the entrepreneur and he tries to optimize his profit using limited resources. Thus, the success of any enterprise is based on the extent of its profitability and milk production is no exception. In the present study efforts have been made to estimate the costs and returns from milk production for different milch animals maintained by different categories of sample households. Crossbred cow The daily maintenance cost per milch crossbred cow and net returns from milk production across different categories of sample households have been presented in Table 1. The overall average daily net maintenance cost per milch crossbred cow was worked out to be Rs 85.96, while it was Rs. 90.68, 84.34 and 85.64 for small, medium and large categories of households, respectively. On an average feed cost accounted for 78.28 per cent of the gross cost in overall category which is more than 65 per cent as reported by Autkar et al. (1995) in Vidharbha region of Maharashtra, 68 per cent as reported by Arun Kumar (2003) in Tamil Nadu and 71.79 per cent by Raju et al. (2005) in Bangalore district of Karnataka. However, the present findings are in agreement with one made by Singh (2008) who also reported feed cost to be 79 per cent of the gross cost in Varanasi district of Uttar Pradesh. The expenditure on concentrate constituted the major feed cost across all the household categories. The overall concentrate cost was worked out to be 44.42 per cent of the gross cost. The overall labour cost accounted for 12.79 per cent of the gross cost while it was found to be 16.34, 12.34 and 10.56 per cent for small, medium and large household categories, respectively which is much less than 20.82 per cent as reported by Bardhan et al. (2005) in Udham Singh Nagar district of Uttaranchal. The labour cost per milch animal was found to be highest for small household category which is in agreement with the findings of Rajadurai (2002) in Madurai district of TamilNadu. The overall fixed cost was worked out to be 8.15 per cent of the gross cost while it was 10.13, 8.00 and 6.67 per cent for small, medium and large household categories, respectively which is much less than 17.63 per cent as reported by Vinod (2005) in Bidar district of Karnataka and 19.11 per cent by Mahajan (2010) in Ludhiana district of Punjab. This could be due to the fact that only value of dairy animals was the major 522
  4. 4. Economics of Milk Production and its Constraints in Nagaland Table 1: Maintenance Cost and Returns per milch crossbred cow (Rs./animal/day) Cost component Variable cost Green fodder Dry fodder Concentrate Labour Miscellaneous Total variable cost (A) Fixed cost Depreciation on fixed capital Interest on fixed capital Total fixed cost (B) Gross cost (A+B) Value of dung (C) Net cost (A+B-C) Sale price of milk (Rs/kg) Milk production (litres) Gross return Net return Cost per litre (Rs) Small Medium Large Overall 12.14 (13.21) 16.34 (17.78) 38.09 (41.42) 15.03 (16.34) 1.02 (1.11) 82.62 (89.86) 12.94 (15.11) 16.85 (19.66) 37.91 (44.25) 10.58 (12.34) 0.54 (0.64) 78.82 (92.00) 13.07 (15.02) 16.87 (19.39) 41.38 (47.56) 9.18 (10.56) 0.70 (0.80) 81.20 (93.33) 12.81 (14.67) 16.75 (19.19) 38.77 (44.42) 11.16 (12.79) 0.68 (0.78) 80.17 (91.85) 4.51 4.80 9.31 (10.14) 91.93 1.25 90.68 24.59 4.61 113.31 22.63 19.68 2.80 4.06 6.86 (8.00) 85.68 1.34 84.34 24.82 4.26 105.77 21.42 19.79 2.78 3.03 5.81 (6.67) 87.00 1.36 85.64 23.55 4.51 106.22 20.58 18.99 3.15 3.97 7.12 (8.15) 87.29 1.33 85.96 24.47 4.39 107.48 21.47 19.58 Note: Figures in parenthesis indicate percentage to gross cost fixed cost as almost all of the cattle shed were of kaccha type and moreover no mechanized equipments were used by the farmers. The overall net return per milch crossbred cow was worked out to be Rs. 21.47 while it was Rs. 22.63, 21.42 and 20.58 for small, medium and large categories of sample households, respectively. The net return per milch cow was highest for small household category. The average daily milk yield was found to be 4.61, 4.26 and 4.51 litres for small, medium and large households while it was 4.39 litres for overall category. The overall per litre cost of milk production was worked out to be Rs 19.58, while it was Rs 19.68, 19.79 and 18.99 for small, medium and large household categories, respectively. Local cow The daily maintenance cost per milch local cow and net returns from milk production across different categories of sample households have been presented in Table 2. As per Table 2, the overall average daily net maintenance cost per milch local cow was worked out to be Rs 42.40, while it was Rs. 39.90, 43.35 and 41.66 for small, medium and large categories of sample households respectively. Feed cost contributed 68.82 per cent of the gross cost where concentrate formed the major cost component with an overall share of 28.44 per cent to the gross cost. The overall labour cost accounted for 21.08 per cent of the gross cost while it was worked to be 25.81, 20.74 and 21.15 for small, medium and large household categories respectively. The overall fixed cost was calculated to be 9.21 per cent of the gross cost while it was 10.00, 11.18 and 7.04 per cent for small, medium and large household categories, respectively. The average milk yield per milch animal per day was found to be 1.47 litres, while it was 1.50, 1.60 and 1.33 litres for small, medium and large household categories. The overall per litre cost of milk production was worked out to be Rs 29.08, while it was Rs 25.93, 27.09 and 31.33 for small, medium and large household categories, respectively. The high per 523 Indian J. Dairy Sci. 65(6), 2012
  5. 5. L.L.Michael Khovelo et al. Table 2: Maintenance Cost and Returns per milch Local Cow (Rs./animal/day) Cost component Variable cost Green fodder Dry fodder Concentrate Labour Miscellaneous Total variable cost (A) Fixed cost Depreciation on fixed capital Interest on fixed capital Total fixed cost (B) Gross cost (A+B) Value of dung (C) Net cost (A+B-C) Sale price of milk (Rs/kg) Milk production (litres) Gross return Net return Cost per litre (Rs) Small Medium Large Overall 8.40 (21.00) 8.96 (22.41) 8.00 (20.00) 10.32 (25.81) 0.31 (0.78) 35.99 (90.00) 7.42 (16.68) 10.43 (23.24) 12.02 (27.01) 9.23 (20.74) 0.51 (1.15) 39.61 (88.82) 7.23 (16.95) 10.12 (23.73) 13.01 (30.51) 9.02 (21.15) 0.26 (0.62) 39.64 (92.96) 7.36 (16.94) 10.19 (23.44) 12.36 (28.44) 9.16 (21.08) 0.39 (0.89) 39.46 (90.79) 3.14 0.86 4.00 (10.00) 39.99 1.10 38.90 20.50 1.50 30.75 -8.15 25.93 4.28 0.70 4.98 (11.18) 44.50 1.15 43.35 23.34 1.60 37.35 -6.00 27.09 2.27 0.28 3.00 (7.04) 42.65 0.99 41.66 21.62 1.33 28.74 -12.92 31.33 3.50 0.52 4.01 (9.21) 43.47 1.07 42.40 22.43 1.47 32.93 -9.47 29.08 Note: Figures in parenthesis indicate percentage to gross cost litre cost of milk production for local cow observed in the study area could be due the low milk yield associated with high gross maintenance cost especially that of concentrate. The net return per milch local cow was found to be negative which is in agreement with the findings of Dixit (1999) in Mandya district of Karnataka and Singh (2006) in Imphal district of Manipur. Constraints and Dairy Farming Practices The constraints faced by the dairy farmers were classified as production constraints and marketing constraints. Production constraints Various production constraints faced by the dairy farmers are presented in Table 3 along with their Garrett score and ranks. It can thus be seen that low availability and high price of concentrate formed the major constraints in milk production for both cooperative and non-cooperative members followed by lack of availability of green fodder. Balakrishna (1997) in Karnataka also reported high cost of concentrate and non availability or poor quality of green fodder to be the major constraints in milk production. Tick and parasitic infestation and lack of veterinary facilities were also considered to be major constraints by many dairy farmers. However parameters like heat detection, inadequate knowledge about balanced feeding, incidence of reproductive disorder were found to be of less importance. It was also observed that both cooperative members and non members faced similar production constraints though they differ in magnitude. Marketing constraints Table 4 provides marketing constraints as perceived by the farmers in the study area. It was revealed that low price of liquid milk was the main constraint faced by the cooperatives members. This might be due to the reason that the price of milk were paid based on fat and SNF. The delay in payment by unorganized sector was the main constraints faced by the non cooperative members. 524
  6. 6. Economics of Milk Production and its Constraints in Nagaland Table 3: Production constraints Constraints Members Non-members Score Score Ranks 71.28 79.71 31.11 24.68 36.43 44.9 57.01 59.81 41.86 51.16 Lack of availability of green fodder Low availability and high price of concentrate Inadequate knowledge about balanced feeding Problem of heat detection Incidence of reproductive disorder Repeat breeding Lack of veterinary facilities Tick/parasitic infestation Lack of awareness on animal health care Lack of training facilities for scientific dairying Ranks II I IX X VIII VI IV III VII V 70.91 80.08 28.45 24.75 35.8 43.73 58.36 58.63 42.76 51.5 II I IX X VIII VI IV III VII V Table 4: Marketing constraints Constraints Members Non-members Score CONCLUSION Results of the study showed that the feed cost accounted for 78.28 per cent of the gross cost in crossbred cows and 68.82 per cent in local cows where concentrate formed the major constituent of the feed cost. The share of labour was 12.79 and 21.08 per cent of the gross cost for crossbred and local cows, respectively. The average daily milk yield of milch crossbred and local cows was found to be 4.39 and 1.47 litres, respectively. The per litre cost of milk production for milch cows was worked out to be Rs 19.58 and 29.08 for crossbred and local cows. The high per litre cost of milk could be due to the high feed cost associated with low milk yield in case of local cows. Therefore, efforts should be made to upgrade the germ plasm of local zebu cattle in order to improve its productivity thus reducing the cost of milk production. The study further observed low availability and high price of concentrate to be the major production constraints in milk production for both cooperative and non cooperative member households, while low price of liquid milk was the major marketing constraint for cooperative members and delay in payment by unorganized sector was the major constraint for non Score Ranks 37.83 33.55 54.84 51.01 71.75 Lack of regulated market and milk cooperatives Lack of transport facilities Unawareness of improved dairy farming practices Delay in payment by unorganized sector Distantly located milk collection centre Low price of liquid milk Ranks IV V II III I 48.43 29.55 35.35 71.4 61.16 III V IV I II cooperative members. Steps may be taken to strengthen the cooperative society infrastructure and payment of remunerative prices of milk to the milk producers. REFERENCES Autkar, V. N., Kumar, K. R. and Thokal, M. R. 1995. Towards livestock economy in Vidharbha region of Maharashtra. Ind. Jr. Agri. Econ. 50(3):325-326. Arun Kumar, P. 2003. Economics of Milk Production and Marketed Surplus of Milk in Vellore District of Tamil Nadu. M.Sc. Thesis, NDRI (Deemed University), Karnal, Haryana, India. Balakrishna, B. 1997. Evaluation of dairy production practices in selected farming systems of Karnataka state. Ph.D Thesis, NDRI (Deemed University), Karnal. Bardhan, D., Srivastava, R. S. L., Dabas, Y. P. S. and Bhogal, T. S. 2005. Economics of milk production from crossbred cattle in Udham Singh Nagar District of Uttaranchal. J. Dairying, Foods & H.S., 24(2):79-85. Basic Animal Husbandry Statistics 2010. Ministry of Agriculture, Dept. of Animal Husbandry Dairying & Fisheries, Govt. of India. Dixit, P. K. 1999. Bovine Economy in Mandya district of Karnataka State - Sustainability oriented analysis. Ph.D. Thesis, submitted to NDRI (Deemed University), Karnal. Mahajan, S. 2010. Economic analysis of rural and periurban dairy farms in Ludhiana district of Punjab 525 Indian J. Dairy Sci. 65(6), 2012
  7. 7. L.L.Michael Khovelo et al. M.V.Sc. Thesis, NDRI (Deemed University), Karnal, India. Manoharan, R. Selvakumar, K. N. Pandian, A. S. S. 2003. Constraints in milk production faced by the farmers in Pondicherry Union Territory, Indian J. Anim. Res. 37(1):68-70. Rajadurai, P. 2002. Economics of milk production in Madurai district of Tamil Nadu, M.Sc. Thesis, NDRI (Deemed University), Karnal, India. Rajendran, K. and Prabhaharan, R. 1998. Constraints in milk production in rural areas of Dharampuri district of Tamilnadu. Indian J. Anim. Prod. Mgmt. 14(2):123125. Raju, S. S., K. Anantharam and K.T. Sampath 2005. Cost of milk production in Institute village linkage programme adopted villages in Bangalore District Karnataka. Indian J. Dairy Sci. 58(5):365-367. Singh, K. R. 2006. Economics of milk production and marketed surplus in Imphal district of Manipur, M.Sc. Thesis, NDRI (Deemed University), Karnal, India. Singh, S. 2008. Economic analysis of milk production in Varanasi District of Uttar Pradesh, M.Sc. Thesis, NDRI, (Deemed University), Karnal, India. Vinod 2005. Economic analysis of production, Utilization and Disposal Pattern of Milk in Rural Areas of Bidar District of Karnataka. M.Sc. Thesis, NDRI, (Deemed University), Karnal, India. 526

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