BUFFALO MILK PRODUCTION IN INDIA:

Economic Viability and Demand Supply

Scenario in 2035

Smita Sirohi1, Prem Chand2 and B.S.Chandel3

1
Head, Division of Dairy Economics,
Statistics & Management,
ICAR-National Dairy Research Institute, Karnal
2
Scientist, (SS), ICAR-ATARI Zone VII, Jabalpur
3
Principal Scientist, DESM Division, ICAR-NDRI

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Map 1: Dairy Production Systems in India
The cost and return concepts used
Operating cost (Paid-out cost): Expenses on home-grown
harvested/purchased feed and fodder, hired labour, breeding,
veterinary and health care, miscellaneous recurring expenses,
insurance premium, paid out rental value of land.
Capital cost: Capital recovery cost of civil structure, dairy machinery
and equipment and milch animals.
Opportunity cost: Imputed rental value of land, imputed value of
family labour, imputed value of grazing.
Gross cost: Operating + Capital + Opportunity cost.
Cost of milk production: (Operating cost+Capital cost+Opportunity
cost – Value of dung) / Milk yield.
Gross return: Value of milk + Value of dung + Value of urine.
Cash Farm Income: Gross Returns – Operating Costs
Farm Income: Gross Returns – Operating Costs – Capital costs
Entrepreneurs’ Profits: Gross Returns – Operating Costs – Capital
costs- Opportunity Cost
Gross Margin: (Gross returns – Operating costs)/Milk yield.
Net Margin: (Gross returns – Operating costs- Capital costs)/Milk
yield.
Net Economic Margin: (Gross returns – Gross cost)/Milk yield.

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Asian Buffalo Magazine JAN - DEC l 2016
 Table 2. Annual cost and returns from buffalo milk
production: Mixed milk production systems
Particulars Indore Ratlam Patna Gorakhpur
Operating Cost 91.86 90.99 93.95 103.40
(Rs./day)
Capital Cost 25.31 29.82 51.04 20.74
(Rs./day)
Opportunity Cost 34.57 36.60 14.86 17.81
(Rs./day)
Table 1. Annual cost and returns from buffalo milk
production: Buffalo based milk production Gross Cost 151.74 157.41 159.85 141.95
(Rs./day)
systems
Gross Returns 191.43 185.02 126.31 124.65
Particulars Moga Bulandshar Anand Mehsana (Rs./day)
Operating Cost 85.77 162.04 91.88 119.74 Cost of milk 22.92 25.38 34.32 30.26
(Rs./day) production (Rs./lit.)
Capital Cost 60.30 35.08 23.38 24.34 Sale price of milk 29.58 30.39 26.48 26.19
(Rs./day) (Rs./lit.)
Opportunity Cost 13.85 20.75 17.49 16.62 Milk Yield 5.96 5.49 4.28 4.28
(Rs./day) (litres/ day)
Gross Cost 159.92 217.87 132.75 160.70 Cash Farm Income 99.57 94.03 32.36 21.25
(Rs./day) (Rs./day)
Gross Returns 180.48 142.99 126.99 166.59 Farm Income 74.26 64.21 -18.68 0.51
(Rs./day) (Rs./day)
Cost of milk 23.21 36.85 43.32 37.12 Entrepreneurs’ 39.69 27.61 -33.54 -17.30
production (Rs./lit.) Profits (Rs./day)
Sale price of milk 26.76 23.18 41.33 38.55 Gross Margin 16.71 17.13 7.56 4.97
(Rs./lit.) (Rs./lit.)
Milk Yield 5.82 5.47 2.89 4.12 Net Margin 12.46 11.70 -4.36 0.12
(litres/ day) (Rs./lit.)
Cash Farm Income 94.71 -19.05 35.11 46.85 Net Economic 6.66 5.03 -7.84 -4.04
(Rs./day) Margin (Rs./lit.)
Farm Income 34.41 -54.13 11.73 22.51 Note: All estimates at 2012-13 prices.
(Rs./day)
Entrepreneurs’ 20.56 -74.88 -5.76 5.89
Profits (Rs./day)
Gross Margin 16.27 -3.48 12.15 11.37
(Rs./lit.)
Net Margin 5.91 -9.89 4.06 5.46
(Rs./lit.)
Net Economic 3.53 -13.69 -1.99 1.43
Margin (Rs./lit.)
Note: All estimates at 2012-13 prices.

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Asian Buffalo Magazine JAN - DEC l 2016
29% 30%

Buffalo
Buffalo-Crossbred
Corssbred
Indigenous
Mixed

10%
21%
10%
Fig. 1. Share of Milk Production Systems in Projected Milk Demand: 2035

20
15
10
5
BAU Production Strategy
percent

0
Aggressive Production Strategy
-5
-10
-15
-20
-25
Normal Demand Growth High Demand Growth
Fig. 2. Milk Supply-Demand Gap in Buffalo Based Production Systems:
Scenario 2035

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Asian Buffalo Magazine JAN - DEC l 2016
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Asian Buffalo Magazine JAN - DEC l 2016