Milk consumption in Pakistan is 159 liters per person per year, which is among the highest in developing world (FAO). The demand for milk is increasing every year. Moreover, in big cities quality of milk is becoming a primary focus of the consumers. Currently, most of the milk (app. 80-85%) comes from small scale dairy farmers (herd sizer < 30 animals), however, a significant increase in medium and large dairy herds is observed in past decade. The increasing feed and other inputs prices are putting pressure on the dairy producers and a careful assessment of the cost of milk was required. The current survey was conducted in the district Lahore with the 5 different types of producers. We hope that outcomes of this project will be useful for the institutions and private sector to design strategies that will support farmers. We are hopeful that the dairy producers and technical service providers will also find these results interesting and will use them to design there KPIs and targets to improve efficiencies.

1. Assessment of Cost of Milk Production of
different Dairy Production Systems in District
Lahore Pakistan
Dr HifzulRahman
Dr Muhammad Naveed ul Haque
Period April 2018- March2019

2. Acknowledgement
- Our sincere acknowledgement to the support provided by the University of
Veterinary and Animal Sciences Lahore Pakistan to conduct this assessment.
- We wish to extend our acknowledgment to the meritorious Professor Dr Talat
Naseer Pasha who personally took interest and provided very useful
guidelines to conduct this survey. Without his continuous involvement and
guideline, the survey would not be possible.
- Farmers and Farm Managers who willingly participated in the study and
helped us in not only providing the information but also provided useful inputs
in exploring many calculations of cost. Thanks a lot.
- Dr. Qurban Ali (Director Livestock Extension and staff (ADLs, VOs, and Vas) of
the department of Livestock and Dairy Development for helping us discussing
with small size prodcuers
- Mubashir, Zeeshan, and Nasir (Teaching Assistant) for helping in review of
literature.

3. Disclaimer
The information presented in this study is an assessment conducted with
the support of University of Veterinary and Animal Sciences (UVAS) Lahore
Pakistan. The results and outcomes presented in this research are carefully
analyzed, however, the UVAS does not guarantee the accuracy or reliability
of the information. The views and comments presented in the document are
of the authors.

4. Milk consumption in Pakistan is 159 liters per person per year, which is among the highest in
developing world (FAO). The demand for milk is increasing every year. Moreover, in big cities
quality of milk is becoming a primary focus of the consumers. Currently, most of the milk (app. 80-
85%) comes from small scale dairy farmers (herd sizer < 30 animals), however, a significant
increase in medium and large dairy herds is observed in past decade. The increasing feed and
other inputs prices are putting pressure on the dairy producers and a careful assessment of the
cost of milk was required. The current survey was conducted in the district Lahore with the 3
different types of producers. We hope that outcomes of this project will be useful for the
institutions and private sector to design strategies that will support farmers. We are hopeful that
the dairy producers and technical service providers will also find these results interesting and will
use them to design there KPIs and targets to improve efficiencies.
Introduction and Objectives of the Project

5. Research Steps
Pre-
selection
Invitation
to enroll
Farm Visits
Data
Analysis
Research
Outcomes
Complete layout of research work is presented in Figure. The dairy farms were
selected according to the following criteria: farm size and total milk production.
Most of the farms milk were supplied to Lahore directly or through processors.
The study did not involve any payment to the selected farmers.

7. Research Methodology
Milk Production Systems
Corporate
Dairy Farms
(n = 4)
Herd Size = 3293
Milk Yield, liter/d
= 25
Medium Size
Cattle Dairy
Farms
(n = 8)
Herd Size = 228
Milk Yield, liter/d
= 18.2
Medium Size
Buffalo Cattle
colony Farms
(n = 20)
Herd Size = 44
Milk Yield, liter/d
= 7
Medium size
rural
(n = 11)
Herd Size = 35
Milk Yield, liter/d
= 5
Small scale
House hold
(n = 18)
Herd Size = 7.7
Milk Yield, liter/d
= 5.6

8. A questionnaire having farm characteristics, cost of feed and other variables
was developed, which was to be filled at farm. Moreover, farmers perspective
on dairy production and challenges was noted.
Research Methodology: Customized Questionnaire

9. Research Methodology: Customized Questionnaire

10. Information collected to estimate Cost/liter

11. Research Methodology: Calculations
• 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝐶𝑜𝑠𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
𝑃𝑒𝑟𝑖𝑜𝑑 𝑜𝑓 10 𝑦
𝑥 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑂𝑝𝑝𝑢𝑟𝑡𝑢𝑛𝑖𝑡𝑦 𝑜𝑛 𝑓𝑖𝑥𝑒𝑑 𝑑𝑒𝑝𝑜𝑠𝑖𝑡𝑠
• 𝐴𝑛𝑖𝑚𝑎𝑙 𝐷𝑒𝑝𝑟𝑖𝑐𝑖𝑎𝑡𝑖𝑜𝑛 =
𝑙𝑒𝑛𝑔𝑡ℎ 𝑜𝑓 𝑝𝑒𝑟𝑖𝑜𝑑 𝑐𝑜𝑤 𝑠𝑡𝑎𝑦 𝑎𝑡 𝑓𝑎𝑟𝑚 𝑥 ℎ𝑒𝑟𝑑 𝑒𝑙𝑖𝑔𝑖𝑏𝑙𝑒 𝑓𝑜𝑟 𝑑𝑒𝑝𝑟𝑖𝑐𝑖𝑎𝑡𝑖𝑜𝑛
Animal depreciation was only assumed for purchased cows. The length of period cow stay at farm
was assumed 6 years because the average no of lactations cows stay at farm was 3.9. The average
calving interval was 450 days in a contemporary study.
• All expenses were reduced to per day and were divided by the total liter produced to find
out the cost per liter.

12. 1. Results: Corporate Dairy- Total Cost
34%
51%
15%
Other Cost
Feed Cost of milking
Feed cost of dry herd
Items, Rs/PKR Mean Median Min Max
Other Cost 19.5 19.8 18.1 20.3
Feed Cost of milking 29.7 30.0 27.7 31.0
Feed cost of dry herd 8.6 8.5 7.0 10.6
Total Cost 57.8 58.3 52.8 61.9

13. 1. Results: Corporate Dairy- Other than Feed Cost
Items, Rs/ PKR Mean Median Min Max
Other Cost 19.5 19.8 18.1 20.3
Human Resource 5.6 5.8 5.0 6.0
Electricity + Fuel 3.4 3.3 2.8 4.0
Semen/AI 0.6 0.3 0.2 1.5
Medicine+hormone+
Vaccine 3.0 3.5 1.1 3.8
Repair and
Maintanance 0.9 0.8 0.7 1.5
Assets Depriciation 0.9 0.9 0.8 1.1
Animal
Dep.insurance 3.3 3.1 3.1 3.7
Store 1.0 1.0 1.0 1.0
Financial Cost 0.9 0.9 0.8 1.1

14. 29%
17%
3%15%
5%
4%
17%
5% 5%
Human Resource
Electricity + Fuel
Semen/AI
Medicine+hormone+Vaccine
Repair and Maintanance
Assets Depriciation
Animal
Dep/Mortality/insurance
Store
Financial Cost
1. Results: Corporate Dairy- Other than Feed Cost

15. Income Mean Median Min Max SD
Other Cost 24.4 25.2 18.7 31.2 4.8
Feed Cost of milking 34.3 34.0 33.0 37.2 1.5
Feed cost of dry herd 16.7 16.7 12.0 22.8 4.3
Total Cost 75.4 74.6 65.7 84.6 7.8
32%
46%
22%
Other Cost Feed Cost of milking
Feed cost of dry herd
2. Results: Medium Dairy- Total Cost

16. Other Cost Breakup Mean Median Min Max SD
Human Resource 8.6 9.1 4.4 11.9 2.9
Electricity + Fuel 3.4 3.7 1.7 5.0 1.2
Semen/AI 1.0 0.9 0.3 1.9 0.6
Medicine+hormone+Vaccine 1.8 1.9 0.5 3.9 1.3
Repair and Maintanance 0.7 0.6 0.2 1.4 0.5
Assets Depriciation 1.7 1.5 1.1 2.8 0.7
Animal Dep/Mortality 4.6 4.6 3.7 5.5 0.6
Store 0.8 0.7 0.3 1.7 0.5
Financial Cost 1.7 1.5 1.1 2.8 0.7
2. Results: Medium Dairy- Other Cost

17. Human
Resource
35%
Electricity +
Fuel
14%
Semen/AI
4%
Medicine+hor
mone+Vaccine
8%
Repair and
Maintanance
3%
Assets
Depriciation
7%
Animal
Dep/Mortality
19%
Store
3%
Financial Cost
7%
2. Results: Medium Dairy- Other Cost

18. Item Mean Median Min Max SD
Herd Size 35 31 16 60 12
Milking herd 20 20 6 35 10
Milk Yield, kg/d 5 5 3 6 1
Total Milk Yield 94 100 30 180 48
Milk income 75 75 65 80 6
Total Feed cost 68 65 54 120 18
Human Resource 15 13 9 25 5
Electricity + Fuel 1 1 1 3 1
Semen/AI 0 0 0 1 0
Medicine 1 1 0 3 1
Repair and Maintanance 1 0 0 2 0
Rent of Place 3 2 1 6 1
Depriciation of Animal 4 4 0 13 4
Total Cost beside Feed 24 22 17 45 9
Final Cost 93 91 73 139 19
Income-Cost -18 -11 -59 4 17
3. Results: Medium Size Dairy: Rural Cattle Buffalo Mix
N= 11)

19. Human
Resource
59%
Electricity +
Fuel
5%
Semen/AI
2%
Medicine
5%
Repair and
Maintanance
2%
Rent of Place
11%
Depriciation of
Animal
16%
3. Results: Medium Size Dairy: Rural Cattle Buffalo Mix

20. Item Mean Median Min Max SD
Herd Size 44 30 9 140 36
Milking herd 33 24 8 90 25
Calf 2 10 3
Adult Dry/heifers 7 40 13
Milk Yield, kg/d 7 7 4 11 1
Total Milk Yield 223 150 50 640 182
Milk income 97 100 87 110 7
Total Feed cost 70 65 54 124 16
Human Resource 11 10 6 25 5
Electricity + Fuel 0.9 1 0 2 1
Semen/AI 0.1 0 0 1 0
Medicine 0.9 1 0 2 0
Repair and Maintenance 0.5 0 0 5 1
Rent of Place 2.8 3 1 4 1
Depriciation of Animal 13 15 0 26 8
Total Other cost 29 28 11 50 10
Final Cost 99 98 74 150 16
Income-Cost -1.9 -2 -45 31 16
4. Results: Buffalo colony farms (n = 20)

21. 4. Results: Small Dairy- Buffalo colony farms: Other than
Feed cost distribution
Human
Resource
38%
Electricity +
Fuel
3%
Semen/AI
0%Medicine
3%Repair and
Maintan…
Rent of Place
10%
Depriciation
of Animal
44%

22. Item Mean Median Min Max SD
Herd Size 7.7 6.0 3.0 16.0 4.2
Milking herd 3.3 3.0 1.0 11.0 2.4
Calf 2.7 2.0 0.0 10.0 2.8
Adult Dry/heifers 2.1 2.0 0.0 5.0 1.9
Milk Yield, kg/d 5.6 5.0 3.8 8.3 1.7
Total Milk Yield 18.3 15.0 4.0 75.0 17.1
Milk income 66.4 67.5 55.0 80.0 5.8
Total Feed cost 58.3 51.5 33.3 91.1 20.1
Human Resource 39.0 33.3 8.0 100.0 24.8
Electricity + Fuel 1.6 0.8 0.0 6.7 1.9
Semen/AI 0.5 0.3 0.0 3.3 0.8
Medicine 1.2 0.8 0.3 3.3 0.8
Repair and Maintanance 0.4 0.3 0.0 1.7 0.5
Rent of Place 3.4 2.2 0.0 16.7 4.8
Depriciation of Animal 6.7 5.1 0.0 20.5 5.2
Total Cost beside Feed 52.8 46.9 14.8 132.2 30.6
Final Cost 111.1 106.9 48.1 216.5 40.6
Income-Cost -44.7 -44.4 -161.5 20.6 44.5
5. Results: Small Scale House Holds Village (n = 18)

23. Human
Resource
74%
Electricity +
Fuel
3%
Semen/AI
1%
Medicine
2%
Repair and
Maintanance
1%
Rent of Place
6%
Depriciation
of Animal
13%
5. Results: Small Scale House Holds Village

25. Conclusions and Perspectives
1. Feed cost represented the highest input cost as expected.
2. Human resource was the second highest cost across the
different production systems.
3. Low milk production, milking to non milking animal ratios, in
the medium and small size farms were the major reasons of
higher cost of milk production.
4.Trained human resource and farmer training programs can be
a useful aide to improve the productivity of small and medium
size farms.

27. Vă mulțumesc pentru atenție
Thank you for your attention
Merci pour votre comprehension
Department of Animal Nutrition
University of Veterinary & Animal Sciences, Lahore
12012018