economics of milk production among different types of dairy farms in Kerala #

. abstract The present study was carried out to study the variation in the cost of milk production among different types of dairy farms in Kerala. A stratified multistage random sampling procedure was used to select the area of study and respondents. The farmers/farm households were categorized into small or subsistence farms (1-3 cows), medium (4-10 cows), and large farms (more than 10 cows). When calculated on a milch animal basis, the average costs of production per litre of milk (cost B) were rupees 28.09, 28.49, 25.68, and 27.69 in small, medium, large and overall farms, respectively. The average costs/litre of milk after deduction of imputed family labour (cost A) were 19.93, 22.78, 24.93, and 21.81 in small, medium, large, and overall farms, respectively. It was observed that on the milch animal basis, the average cost/litre of milk (cost B) were 32.51, 34.29, 29.08, and 32.29 in small, medium, large, and overall farms, respectively. The average cost per litre of milk after deduction of imputed family labour cost (cost A) were 22.02, 26.33, 27.08, and 24.34 in small, medium, large, and overall farms, respectively. The present study indicated that the average cost of milk production in the state of Kerala was very high, and the milk price has to be regulated accordingly so that dairy farming becomes a lucrative livelihood opportunity for poor farmers.

Profitability is the keyword that drives any enterprise.The cost of production of milk is a function of several variables.Capital investments include the cost of animals, housing, etc., along with the expenditure to develop the permanent infrastructure of the enterprise.Recurring expenditure is accounted for the cost of feedstuff, labour, and other contingent expenses.The scale of production is another factor that influences cost-effectiveness.The cost of production is a crucial function determining the selling price of milk and formulating various schemes to support the dairy farmers.But there were only a few reports available regarding the cost of milk production incurred by the dairy farmers of Kerala, belonging to different categories of farms.Hence the present study was undertaken to analyse the cost of milk production of small, medium, and large dairy farms of Kerala.

Materials and methods
The respondents selected for the present study were dairy farmers, who were members of dairy co-operatives and were enrolled in the Direct Benefit Transfer (DBT) scheme of the Government of Kerala.Since the total population of milk producers under the DBT members scheme were nearly two lakhs, a total sample size of 350 farmers was selected for the study.The farmers/farm households were categorized into small or subsistence farms (1-3 cows), medium farms (4-10 cows), and large farms (more than 10 cows) (KAU, 2010).Out of the 350 farmers selected for the study, the numbers of small, medium and large farms were fixed as 175, 100, and 75 respectively.A stratified multistage random sampling procedure was used to select the area of study and respondents.In the first stage, the state of Kerala was stratified into five agro-climatic zones (NARP, 1989).In the second stage, one district from each zone (strata) was randomly selected.In the third stage, from each district, two blocks were randomly selected.
The sample size for each category of farms in each block was determined in proportion to the number of farmers belonging to each category (probability proportion to size technique).For this, all the farmers in the selected blocks were enumerated and classified into small, medium, and large farms based on the number of cows.The respondents in each group were chosen randomly in each block, proportional to their number in each block.Primary data were collected by means of observation, in-depth interviews, and questionnaires.
The data were subjected to tabular analysis for estimation of fixed capital investment to analyse the investment pattern and cost of milk production in different farm sizes.

Investment pattern
The income-generating capacity of a dairy owner was reflected through the investment pattern.The fixed investment in the farm was considered for this study which included, 1.Investment for milch animals 2. Investment for farm buildings

Investment for machinery and equipment
The proportionate investment on the above items was worked out separately for various categories of the farm.

Costs and returns concepts
The maintenance cost of animals was calculated separately for per milch animal, and milch animal per day basis.The returns were also calculated separately for per milch animal, and milch animal per day basis.The cost of production per litre of milk was also estimated for milch animal and milch animal per day basis.
Fixed cost: It is the expenditure incurred whether or not the production is carried out.It includes interest on fixed capital and depreciation calculated based on standard animal units.
The components of fixed cost were interest on fixed capital investment (@12% annually) and depreciation on fixed capital.The depreciation on fixed capital comprises depreciation on milch animals @ 12.5% and The depreciation on cattle shed was calculated by the type of building, considering their foundation, superstructure, and roof.Based on this, the value and productive life of the buildings was estimated for calculation of depreciation.
The buildings were classified into five types with the depreciation of 3, 5, 10, 20, and 30 percent.The depreciation on equipments was estimated at 10 per cent level.

Variable cost:
Variable costs include the costs incurred on variable factors of production and can be altered in the short run.It includes feed cost, labour cost, veterinary cost, and insurance cost.ii.Labour cost: It was estimated including the family and paid labour costs.The hired labour was calculated on the basis of actual cost incurred.In the case of family labour, the imputed value obtained depending upon the time spend in dairying and wage rates as fixed by minimum wages fixed by the Government of Kerala.The labour cost was apportioned on a standard animal unit basis (Kumbhare et al., 1983).iv.Insurance cost: For all milch animals @ premium rate of 3 per cent per annum

Gross cost:
The gross cost was calculated by adding all the variable costs and total fixed costs.

Gross cost = Total fixed cost + Total variable cost
Net cost: For calculating net cost, the imputed value of dung is deducted from the gross cost @ Rs. 0.9/Kg).

Net cost = Gross cost -Imputed value of dung
The cost per litre of milk was estimated by dividing the average gross maintenance cost per day by average daily milk production.
Cost per litre of milk (Rs) on milk animal basis = i. Cost of feed & fodder: It includes the cost of feed materials like concentrates, green fodder, and hay/straw consumed by the animals.

Table 1 .
Cost of milk production per litre on milch animal basis in small, medium, large, and overall average value of all the farms.

Table 2 .
Cost of milk production per litre on milch animal basis in small, medium, large and overall average value of all the farms