CHAPTER XI

11. INCOME AND COST-BENEFIT ANALYSIS IN DAIRY ENTERPRISE

11.1 Household e n t e r p r i s e :

11.1.1 Income :

The so u rces o f income in d a i r y e n t e r p r i s e are

m ilk, manure (cowdung) and c a l f . But in the p r e s e n t study,

the income from m ilk was o n ly taken i n t o c o n s i d e r a t i o n . The

e v a lu a t i o n o f cowdung was n ot done f o r in alm ost a l l the

r u r a l households (99.37% ) the cowdung was u sed as a farm

y a rd manure in own crop c u l t i v a t i o n , o r a p o r t io n was

given to the n eigh bou rs f r e e o f c o s t . I t i s d i f f i c u l t to

impute v a lu e in such ca se s as there was no market f o r the

p ro d u c t. The s o l d v a lu e o f v e ry sm all q u a n t i t y o f cowdung

in 2 (0.63% ) households and a l s o t r a n s a c t io n o f v e r y sm all

q u a n t it y o f b a r t e r o f cowdung f o r o t h e r commodity were

ig n o r e d in the stu d y. Hence, the i n d i r e c t income d e r iv e d

from cowdung was c o n s id e re d as an a d d i t i o n a l b e n e f i t to

the fa rm e r. The income from c a l f was not c o n s id e re d for

c a lc u la tio n because o f d i f f i c u l t y in v a lu a t i o n due to

u n c e r t a i n i t y in the s u r v i v a l o f the c a l f as w e l l as lack

o f in fo rm a tio n o f the s e l l i n g p rice . The c a l f was, t h e r e fo r e ,

c o n s id e r e d as an a d d i t i o n a l b e n e f i t to the farm er.

For c a l c u l a t i n g the income from m ilk, the e n t i r e

q u a n t it y o f m ilk, whether consumed a t home o r s o ld , was

 145

e v a lu a t e d a t the s e l l i n g p r i c e p r e v a i l e d in th e v i l l a g e .

The a v e ra g e s e l l i n g p r i c e o f m ilk a t d i f f e r e n t d e v e lo p m e n t

b l o c k s i s p r e s e n t e d in T a b le 1 1 .1 . I t was fo u n d t h a t the

p r i c e o f m ilk in a l l th e d e v e lo p m e n t b l o c k s ra n g ed from

Rs. 4 .0 0 t o Rs. 5 .0 0 p e r l i t r e . The a v e ra g e m ilk p r i c e was

th e h i g h e s t ( R s .4 .8 6 /l i t r e ) in R ani d e v e lo p m e n t b l o c k ,w h i l e

i t was th e l o w e s t ( R s .4 .1 4 /l i t r e ) in R an g ia d e v e lo p m e n t

b lo c k (T a b le 1 1 . 1 ) . T h is v a r i a t i o n was due t o h ig h e r

demand o f m ilk in Rani d e v e lo p m e n t b lo c k w h ich was c l o s e

t o Guwahati c i t y .

T a b le 1 1 .1 . S e l l i n g p r i c e o f m ilk a t d i f f e r e n t d e v e lo p m e n t
b lo c k s

1
1
1 P r i c e / l i t r e o f mi lk ( ru p e e s)
D ev elop m en t f
i 1
b lo c k s i
i Range | A v e ra g e
i 1

R ani 4 .0 0 - 5 .0 0 4 .8 6

Kam alpur 4 .0 0 - 5 .0 0 4 .6 9

K a ra ra 4 .0 0 - 5 .0 0 4 .4 1

R an gia 4 .0 0 - 5 .0 0 4 . 14

B a rig og-B a n b h a g 4 .0 0 - 5 .0 0 4.37

P u b -N a lb a r i 4 .0 0 - 5 .0 0 4 .5 0

O v e r a ll 4 .0 0 - 5 .0 0 4 .4 8
 146

The average income from milk from a non-descript

and crossbred cow per year o f herd l i f e in d if f e r e n t size

groups o f commercial private farms i s presented in Table 11.2.

Table 11.2. Average income from milk per cow per year of herd
l i f e in household dairy enterprise of d if fe r e n t
size groups

(in Rupees )
Size groups
Type of cows |
3 c I; d
• O verall
iaveraae
.... ......i........

Non-descript 954.32 942.72 1055.49 914.87 967.43

Crossbred 3886.2 3 337 6 .0 9 4286.27 4134.4 2 40 17 . 24

I t i s evident from Taole 11.2 and Fig. n .l that

the income from milk per year of herd l i f e of a crossbred cow

was more than 4 times higher tnan that of a non-descript cow

(Rs. 4017 .24 vs Rs.967.43). This was due to higher milk produc­

tion in crossbred cows. The income from milk per cow per

year of herd l i f e fo r both types of cows d if fe r e d in d i f f e r e n t

size groups due to the variation in milk y ie ld .

11.1.2 C o st-b e n e fit analysis :

The c o s t -b e n e fit analysis was made to study the

economic e ffic ie n c y of household dairy enterprise o f d i f f e r e n t

 147

Non-descript cow
0 * 0 Crossbred cow

• DQ
• DC
•
Rupees (in thousand)

•
03
U)

• 03
• EQ
03
• 03
N)

* 00
« DC
• QQ
t DC
(-*

M
E E E
B ED
□ ED
O

Income P ro fit

P IG .li.i Income and p ro fit per year per

non-descript and per crossbred
cow in household dairy enterprise
 148

s i z e groups, e i t h e r w ith n o n - d e s c r i p t o r c r o s s b r e d cows.

The th re e fu n c t io n s o f income and expense ( c o s t ) were

used as measures o f economic e f f i c i e n c y as su gg ested by

H a r r i s 1. These fu n c t io n s were as f o l l o w s :

T otal p r o f i t = Income - C o s t

Income p e r u n i t Income
o f in v e s tm e n t Cost

C ost per u n it o f Cost

p ro d u ctio n Income

2
B a la in e e t a l . s u g g e s te d t h a t fu n c t io n income -

expense should be e x p re s s e d as p e r day o r p e r y e a r o f nerd

life . In the p r e s e n t study the c o s t b e n e f i t a n a ly s is was

made f o r p e r y e a r o f herd l i f e . The c o s t - b e n e f i t a n a ly s is

in household d a i r y e n t e r p r i s e i s fu r n is h e d in T a b le 11.3.

The o v e r a l l a v e r a g e p r o f i t p e r ye a r o f herd l i f e

was about 5 times h ig h e r f o r c r o s s b r e d cow than f o r non­

d e s c r i p t cow (Rs.3492.05 v^R s.701 .25) (T a b le 11.3, F i g . 11. l) .

The p r o f i t p e r cow p e r y e a r o f herd l i f e in c r e a s e d as the

number o f cows p e r household in c r e a s e d from one cow in s i z e

group A to 3 cows in s i z e group C. The income p e r u n i t c l

in v e s tm e n t was s l i g h t l y more than two tim es h ig h e r in case

o f c r o s s b r e d cow than in n o n - d e s c r ip t cow. F u rth er, i t was

found t h a t the income p e r u n i t o f in v e s tm e n t in c r e a s e d as

the number o f cows in a household in c r e a s e d from 1 to 3 in

 T a b le 1 1 .3 . C o s t - b e n e f i t a n a l y s i s in h o u s e h o ld d a i r y e n t e r p r i s e
o f d i f f e r e n t s i z e g ro u p s
(in R upees)
S iz e g ro u p s
B O v e r a ll
a v e ra g e
C o s t/c o w /y e a r :
N o n - d e s c r ip t 2 9 5 .5 9 27 1 .0 4 267 .8 9 2 3 2 .3 9 2 6 6 .1 8
C r o s s b re d 6 5 3 .4 4 560 . 83 5 3 1 .7 1 4 8 9 .6 9 5 2 5 .1 9
Incom e fro m m ilk /
c o w /y e a r 5
N o n - d e s c r ip t 9 5 4 .3 2 942 .7 2 1 0 5 5 .4 9 9 1 4 .8 7 9 6 7 .4 3
C r o s s b re d 3 8 8 6 .2 3 3 3 7 6 .0 9 428 6 .2 7 4 1 3 4 .4 2 4017 .2 4
Profi V c°w/ Y ear *
N o n - d e s c r ip t 658.7 3 67 1 .6 8 687 . 60 6 8 2 .4 8 7 0 1 .2 5
C ro s s b re d 3 2 3 2 .7 9 2 8 1 5 .2 6 37 5 4 .5 6 3 6 4 4 .7 3 3 4 9 2 .0 5
I n c o m e /u n it o f
in v e s tm e n t :
N o n - d e s c r ip t 3 .2 3 3 .4 8 3 .9 4 3 .9 4 3 .6 3
C ro s s b re d 5 .9 5 6.02 8 .0 6 8 .4 4 7 .6 5

C o s t/u n it o f
p ro d u c tio n •
N o n - d s s c r i pi 0 .3 1 0 .2 9 0 .2 5 0 .2 5 0 .2 8
C ro s s b re d 0 .1 7 0 .1 7 0.12 0.12 0 .1 3

I
-1
if *
vO
 150

c a s e o f n o n -d e s c r ip t cows and from 1 to more than 3 in

c a s e o f c r o s s b r e d cow s. W hile com paring the c o s t p er u n it

o f p r o d u c tio n , i t was o b s e r v e d th a t i t was much low er in

c r o s s b r e d cow than in n o n -d e s c r ip t cow ( Rs. 0 .1 3 vs .-is.0 .2 8 ) .

The average c o s t p e r u n it o f p r o d u ctio n d e c r e a s e d as the

number o f cows p e r h ou seh o ld in c r e a s e d from one in s iz e

grou p A to 3 in s i z e group C .

1 1 .1 .3 C o s t p e r l i t r e o f m ilk p r o d u ctio n s

The c o s t p e r l i t r e o f m ilk p r o d u c tio n c o u ld be

u sed as one o f the measures o f econom ic e f f i c i e n c y . T his

was c a lc u l a t e d as fo l lo w s s

X
C o s t p e r l i t r e o f m ilk p r o d u ctio n = ---------------
Y

Where, X i s t o t a l c o s t f o r a cow p e r y e a r o f

herd l i f e ,

Y is t o t a l m ilk y i e l d o f a cow p er

yea r o f herd l i f e .

The t o t a l c o s t f o r a cow p e r y e a r o f herd l i f e

was u sed f o r c a l c u l a t i o n o f c o s t p er l i t r e o f m ilk p rod u c­

t i o n . In c a lc u l a t in g th e t o t a l c o s t the im puted va lu e o f

the fa m ily la b o u r was e x c lu d e d . S in ce the incom e from

cowdung and c a l f was n o t e x p r e s s e d in terms o f monetary

v a lu e b u tc o n s id e r e d as an a d d it io n a l b e n e f i t to the fan n er
 151

the t o t a l c o s t f o r a cow was c o n s id e r e d f o r e s tim a tio n o f

c o s t p e r l i t r e o f m ilk p r o d u c t io n . The av era ge c o s t per

l i t r e o f m ilk p r o d u ctio n in n o n -d e s c r ip t and c r o s s b r e d cows

in d i f f e r e n t s i z e groups i s p r e s e n te d in T able 1 1 .4 .

T able 1 1 .4 . A verage c o s t p e r l i t r e o f m ilk p r o d u ctio n in

d i f f e r e n t ty p e s o f cows in h ou seh old d a ir y
e n t e r p r is e o f d i f f e r e n t s i z e groups

(in Rupees)

s
1
I S iz e groups
Types o f cow 1 1 1
; O v e r a ll
1 1
1 i ^ 1 U
|average
i i i 1

Non -d e s c r i p t 1.44 1.26 1.17 1.07 1.23

C ro ss b re d 0 .8 0 0.7 4 0 .5 4 0 .5 1 0.57

I t was o b s e r v e d t h a t the c o s t p e r l i t r e o f m ilk

p r o d u ctio n was much lo w e r in c r o s s b r e d cow than in non­

d e s c r i p t cow and i t d e c r e a s e d a lo n g with the in c r e a s e in

number o f cows in a h o u s e h o ld .

11.2 Comm ercial e n t e r p r is e :

1 1 .2 .1 Income :

The incom e from m ilk and cowdung was taken in t o

c o n s id e r a t io n in com m ercial d a ir y e n t e r p r i s e . The income

from c a lv e s was c o n s id e r e d as an a d d it io n a l b e n e f i t as in
c a s e o f h o u s e h o ld d a i r y e n t e r p r i s e . F or c a l c u l a t i n g the

in com e from m ilk , the e n t i r e q u a n t it y o f m ilk p ro d u ce d

was e v a lu a t e d . But in c a s e o f cow dung, th e amount r e c e i v e d

by th e fa rm e r from s a l e o f cowdung was o n l y c o n s i d e r e d .

D u rin g th e p e r i o d o f th e s tu d y th e m ilk was fo u n d t o be

s o l d to th e middleman # Rs. 4 .6 0 p e r l i t r e o f m ilk in

co m m e rcia l p r i v a t e d a i r y fa rm s . But in G overnm ent d a i r y

fa rm s, th e m ilk was s o l d t o th e con su m ers d1 Rs. 3 .8 0 (ca sh

in m ilk b o o th ) and Rs. 4 .0 0 (ca s h in d o o r d e l i v e r y and b i l l )

per lit r e o f m ilk in one farm l o c a t e d in th e c i t y , and &

Rs. 3 .0 0 p e r l i t r e o f m ilk in th e o t h e r farm l o c a t e d in

ru ra l a rea.

The incom e from m ilk and cowdung p e r c r o s s b r e d

cow p e r y e a r o f h erd l i f e i n co m m e rcia l p r i v a t e d a i r y farm s

o f d i f f e r e n t s i z e g ro u p s i s fu r n is h e d in T a b le 1 1 .5 w h ile

t h a t in G overnm ent d a i r y fa rm s i s fu r n is h e d in T a b le 1 1 .6 .

I t i s o b v io u s from th e T a b le 1 1 .5 , t h a t th e incom e from

m ilk p e r c r o s s b r e d cow p e r y e a r o f h e rd l i f e v a r ie d

m a rk ed ly betw een s i z e g r o u p s and t h i s was due t o the

v a r i a t i o n in m ilk p r o d u c t io n p e r y e a r o f h e rd l i f e . The

in com e from cowdung in s i z e g ro u p s I I I and IV was n i l ,

b e ca u s e th e fa rm e rs o f th e s e s i z e g ro u p s c o u l d n o t s e l l

cowdung due t o t r a n s p o r t a t io n d i f f i c u l t i e s . I t was o b s e r v e d

t h a t in co m m e rcia l p r i v a t e d a i r y farm s th e a v e ra g e incom e

p e r c r o s s b r e d cow p e r y e a r o f h erd l i f e v a r i e d betw een

Rs. 9161 .2 8 and Rs. 1 0 6 1 6 .0 2 , th e o v e r a l l a v e r a g e b e in g

 v: 3

Table 1 1 .5 . A verage incom e p e r c r o s s b r e d cow p e r yea r oi'

herd l i f e in com m ercial p r iv a t e d a ir y e n te r ­
p r is e o f d i f f e r e n t s i z e grou p s
(in Rupees)
............ ............... ............T
l
i Income p e r cow p er yea r
S iz e grou p s *r k
i
i M ilk 1 Cowdung J T o ta l
a J

i 10523.92 92 . 10 10616.02
ii 9165.7 8 152.27 9318.05
h i 9957 .45 0 9 9 57 . 45
IV 9167.28 0 9167 .28
V 9 5 47 . 30 118.42 9665.7 2
O v e r a ll
9670.08 55.10 9725.18
average

Table 1 1 .6 . Income and c o s t - b e n e f i t a n a ly s is in Government

d a ir y e n t e r p r is e
(in Rupees )
1 1 |
O v e r a ll
Farm - I • Farm - I I ' average
i 1 1
a I a

In co m e /co w /y e a r
o f herd l i f e :
a) M ilk 4646.17 547 5.00 50 30 .98
b) Cowdung 18.87 0 .0 0 10.11
T o ta l (a+b) 4665.04 547 5.00 5041.09

T o ta l c o s t /c o w / 8065.36 50 3 5.47 6658.63

y ea r

P r o f i t ( + ) o r lo s s
-3 4 0 0 .3 2 +439.53 -1617 .54
( - ) /c o w /y e a r

In c o m e /u n it o f
0 .5 8 1.09 0 .7 6
in vestm en t

C o s t /u n i t o f
1.7 3 0 .92 1.32
p r o d u ctio n
 154

Rs. 97 2 5 .1 8 (T a b le 1 1 .5 , F ig . 1 1 .2 ) . In ca se o f Government

d a ir y farm s the o v e r a l l av era ge incom e from m ilk and cowdung

p e r c r o s s b r e d cow p e r y e a r o f herd l i f e was found to be

Rs. 5041.09 (T a b le 11 .6) which was n e a r ly h a lf o f th a t

o b t a in e d in com m ercial p r iv a t e d a ir y farm s. This was la r g e l y

due to low er m ilk y i e l d o f c r o s s b r e d cows m ain tained in

Government d a ir y farm s. F u rth er, the m ilk was a ls o s o ld a t

lo w e r p r i c e in Government farm s.

1 1 .2 .2 C o s t - b e n e f i t a n a ly s is s

The c o s t - b e n e f i t a n a ly s is in com m ercial p r iv a t e

d a ir y farms i s p re s e n te d in T able 11.7 . I t was found th a t

the o v e r a l l average p r o f i t p e r c r o s s b r e d cow p e r y e a r o f

herd l i f e in com m ercial p r iv a t e farms was Rs. 1212.89 which

v a r ie d between Rs. 9 9 3.27 and Rs. 1315.7 5 in d i f f e r e n t s iz e

g r o u p s . The p r o f i t p e r c r o s s b r e d cow was lo w e r in s i z e

groups IV and V (T a b le 1 1 .7 , F ig . 1 1 .2 ) . In Government

d a ir y farm s, th e p r o f i t p e r c r o s s b r e d cow p e r y e a r was

found in one farm w h ile in o t h e r farm th e re was l o s s o n ly .

T h is was due to much h ig h e r c o s t bu t much low er incom e in

Farm-I than in Farm -II (T a b le 1 1 .6 ) . The h ig h e r c o s t in

Farm-I was l a r g e l y due to much h ig h e r e x p e n d itu re on la b o u r

and m is c e lla n e o u s item s (T a b le 9 . 1 8 ) . The much lo w e r m ilk

y i e l d in Farm-I m ain ly a cco u n te d f o r lo w e r incom e in th a t

farm (T a b le 1 0 .8 ) . The o v e r a l l income p e r u n it o f in v estm en t

 155

9c
«
O
$
a

FIG. 11.2 Income and p r o f i t per year per

crossbred cow in Commercial
p rivate d a iry en terp rise
 156

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t—l o
45
r -• rH
• • CTi
• •
T a b le 11.7 . C o s t - b e n e f i t a n a l y s i s in c o m m e rc ia l p r i v a t e d a i r y

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 157

was Rs. 1.14 and Rs. 0.7 6 in com m ercial p r i v a t e and Government

d a ir y farms r e s p e c t i v e l y (T a b le s 11.6 and 1 1 .7 ). The h ig h e r

income p e r u n i t o f in v e s tm e n t in com m ercial p r iv a t e farms

was due to h ig h e r m ilk p ro d u c tio n on cows in th e se farm s.

1 1 .2 .3 C ost per l i t r e o f m ilk p ro d u ctio n :

In com m ercial p r i v a t e d a ir y e n t e r p r is e the c o s t

per l i t r e o f m ilk p ro d u c tio n was c a lc u la t e d as p e r Cantarn

and P a ra cer^ and Dhondyai^ as fo llo w s s

C o s t / l i t r e o f m ilk p ro d u c tio n = -----a-~*- ^----

c

Where, a = t o t a l co st/ co w / yea r

b = income from cowdung/cow/

year

c = m ilk y ie ld / c o w / y e a r o f
h erd l i f e .

The c o s t p e r l i t r e o f m ilk p ro d u ctio n in com m ercial

p r iv a t e d a ir y e n t e r p r is e o f d i f f e r e n t s i z e groups i s p resen ted

in T a b le 1 1 .8 . The c o s t p e r l i t r e o f m ilk p ro d u ctio n was the

lo w e s t in s i z e grou p I I (Rs.3.94) and the h ig h e s t in s iz e

group V ( rs . 4.12 ) . The o v e r a l l c o s t o f m ilk p ro d u ctio n was

Rs. 4.02 p e r l i t r e (T a b le 11.8) . I t 'was o b s e rv e d t h a t in

Government d a ir y farm s, the o v e r a l l a v e ra g e c o s t o f m ilk

p ro d u c tio n was h ig h e r ( rs . 4.48 ) than t h a t o f com m ercial

p r iv a t e d a ir y farms (T a b le 11.9, fig . 11.3) . F u rth er In the

 T a b l e 1 1 . 8 . C o s t p e r l i t r e o f m i l k p r o d u c t i o n i n c o m m e r c i a l

p r i v a t e d a i r y e n t e r p r i s e o f d i f f e r e n t s i z e g r o u p s

( i n R u p e e s )

S i z e g r o u p s

I I I I I A J O v e r a l l
I V
I a v e r a g e

T o t a l c o s t / c o w /
9 3 5 7 . 6 8 8 0 0 2 . 3 0 8 6 7 0 . 9 1 8 0 6 3 . 7 6 8 6 7 2 . 4 5 8 5 1 2 . 2 9
y e a r ( a )

I n c o m e f r o m
0
c o w d u n g / c o w / 9 2 . 1 0 1 5 2 . 2 7 1 1 8 . 4 2 5 5 . 1 0

y e a r ( b )

N e t c o s t / c o w /
9 2 6 6 . 5 8 7 8 5 0 . 0 3 8 6 7 0 . 9 1 8 0 6 3 . 7 6 8 5 5 4 . 0 3 8 4 5 7 . 1 9
y e a r ( a - b )

M i l k y i e I d ( l i t r e ) /

c o w / y e a r o f h e r d 2 2 8 7 . 8 1 1 9 9 2 . 5 6 2 1 6 4 . 6 6 1 9 9 2 . 8 9 2 0 7 5 . 5 0 2 1 0 2 . 1 9

l i f e ( c )

C o s t / l i t r e o f

m i l k p r o d u c t i o n 4 . 0 5 4 . 1 2 4 . 0 2
4 . 0 5 3 . 9 4 4 . 0 1
) a - b
")
158
 159

rp 0) co tH CM CD
rH O' CD rH m CD
id rd • • • •
H P i co o CO LD •
11.9. C o s t p e r l i t r e o f milk p ro d u c tio n in Government

(L) GJ m rH CD
> > CO KQ
O 'D CD o rH

H
H
r~ r** 0
!
•
o 0• CD
o • r-
E in • in in •
M CO o ro CM CM
id o o CD
ID m rH

.......

i
CO
ro
Cf\ 0
CM m
• 5 • • r-
£ m • CO rH •
e n te rp rise

H CO CO o\ CO
rd O rH o rH
CD OG rH
d a iry

\
S
(d O b \
u 1 r>
\ rd 0
P Cn 0
T a b le

rd c X
9? 3 p 'u* rH
TJ rd <U •H
\ 3 <u p c
? O -p
0 0 \ *w cp
o ;? rH 0
e 0
> 0 0 X? 0) c
(0 p rH p 0
o ■(1 -p -p
0 b CO -P 0 •p -p
<D^ 0 > !W *1 u
<—1 e 0
(tj O P X P >.g
-p O rd -p rH fd w 0
0 C 0) 0) ■h <u 0 P
Eh H >i 2 S >1 rj fi
 Rural household

C1QO Commercial private

unn
farm
Government farm
*
5 r-

FIG.11.3 Cost per litre of milk production

in non-descript (ND) and crossbred (CB)
cows in rural households and cross­
bred cows (CB) in Commercial private
and Government dairy farms
 161

two Government dairy farms, there was wide difference in

cost of milk production. The higher cost of milk pro-auc­

tion in one Government dairy farm was largely contributed

by much higher cost of labour and miscellaneous expenses

and lower production of milk in that farm.

REFERENCES

1. Harris, D.L. (1970). Breeding for efficiency in livestock

production s Defining the economic objective. J.

Anim. Sci., 30(6) s 860-865.

2. Balaine, D.S., Pearson, R.E. and Miller, R.H. (1981).

Profit functions in dairy cattle and effect of

measures of efficiency and prices. 0. Dairy Sci.,

64(l> : 87-95.

3. Gautam, V. and Paracer, R.D, (1985). An evaluation of the

impact of livestock development activities in two

Haryana villages. Indian J. Anim. Prod. Mgmt.

1(1) : 7-12.

4. Dhondyal, S.P. (1981). Farm management. 2nd edn.,Friends

Publications, 90, Krishanpuri, Meerut-2, India,

p. 361.
 P A R T - V

RESULT OF INVESTIGATION IN POULTRY ENTERPRISE