Dairy Economics Statistics and Management

A Statistics Section was first formed at NDRI in 1960, which was later converted into the Division of Dairy Economics, Statistics and Management (DES&M) in 1972. Dr. R.K. Patel joined as the first Head of the division. He steered the division to expand its research and teaching activities and the discipline of Dairy Economics got real impetus under his able leadership. Apart from conducting research on various economic aspects of dairy sector in India for strategic planning at national and international level, the work here attempts to understand the complex array of forces that influence the level and behavior of agricultural products. The division also endeavors to further advance the knowledge in economic and statistical analysis techniques pertinent to research work and to assess technologies, programs and policies to make informed judgments about the trade-offs in allocating scarce resources, predicting resulting changes or their economic consequences. The division harnesses the emerging tools, techniques and research methods in econometrics and statistics to provide direction in designing policies & program, developing institutional mechanisms and facilitating decision-making process of the stakeholders at micro, meso and macro levels.

Academic Courses

The Division has strong experience and capacity to conduct research in inter-disciplines of dairy economics, statistics and management. In the past, followings have been the broad areas of research:

The research in the Division is conducted by the learned faculty by proposing research projects on current issues and by guiding the post-graduate students in their research for dissertation. The funding of research projects proposed by the faculty may be internal (Institutional) or external (sponsored by agencies other than ICAR). With following outside agencies, the Division has developed strong academic and research linkage.

The research conducted by students contributes significantly in overall research outcome of the Division. The students of both master and doctoral degree are involved in research on important topics decided in consultation with faculty, as partial fulfillment of their degree program and results are submitted in the form of thesis. Some of the broad topics of students’ research have been as mentioned below.

Master Research

Doctoral Research

In order to conduct research, the modern techniques and models are used. The Division has pan-India mandate and hence, the research studies address issues of dairy production, processing and marketing across state. The studies are also taken to analyze international trade and developments in the field of dairying.

Outcome of the research is published in the form of research articles in national and international referred research journals, popular articles, book chapters and bulletins. Some of the recent publications of the Division in referred journals are as following:

Publications

Technologies developed

Web-enabled user friendly software : Milk Production Economic Analysis Package (MILKEcAP-1.0) was developed for the estimation of economics of milk production of local cattle, crossbred cows and buffaloe The software has three modules for database management pertaining to village level information, complete enumeration of the milch animal stock of the households and the detailed information pertaining to the breeding, feeding, management of animals, quantity and prices of fixed and variable inputs used, as well as output generated in the production process. The software has build-in feature of estimating the fixed and variable cost components on per animal basis.

Web-enabled user friendly software

A web based app : TEAM-CD (Techno Economic AssessMent-Commercial Dairy farm) was developed for the prospective entrepreneurs of commercial dairy farming using ASP.Net.4.0 as front end and MS-SQL server as back end. It is a decision support system based on the scientific principles of animal husbandry and economics. The software developed is robust to accommodate the regional specificities and user specific requirement in dairy farming. The app provides for generating project report for commercial dairy herd of 10 to 500 adult females. This app has 16 modules, in which 6 are input modules and 10 are output modules. It has a provision for customising the project parameters in accordance with the user requirement. The pre-feasibility project report is generated in the pdf format, giving complete financial analysis of the project for 5 year period including the repayment schedule.

A web based app

Performance appraisal of dairy industry in India

2011-12

Industrial de-licensing in 1991 led to sharp increase (136%) in the number of dairy plants in the organized sector. Within the organized sector, in terms of number of plants, there was a structural change towards Private Ltd. Companies, but in terms of milk handled, the cooperatives continued to dominate. Milk processing in India is dominated by the unorganised sector, although after 2000-01, there has been a decline in number of unorganised dairy manufacturing units in the country. The own-account manufacturing enterprises, smallest sized units in unorganised sector predominate, but their number and share has been declining over time. The employment growth in the unorganised sector was high, but the real Gross Value Added per enterprise was slow.

Total factor productivity of organised dairy industry: All India

The Total Factor Productivity Growth in the organised segment increased at the compound annual rate of 7.18% during 1980/81-2008/09, yet the decadal trends show a slowing down of TFP growth. The states with high TFP growth are, Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh; slow growth in TFP has been estimated in Kerela, Maharashtra, Punjab, and Uttar Pradesh; while in Haryana, Tamil Nadu and West Bengal the TFP growth has been negative. The mean Technical efficiency score worked out to be 0.86, implying that substantial possibility of increasing the output by improvement in efficiency levels exists in the dairy industry. In organised milk processing sector, the growth in real value of output per factory has slowed down drastically from compound annual rate of 8.66% during the 1980s to 1.53% during the 1990s and further to 1.06% in the on-going decade. Post 1990s increase in net value added received a sharp setback during the global economic crisis. Similarly, the real profits that had picked- up after 1999-00 registered a steep decline during global crisis. The growth in labour productivity was positive in the organised sector, but the capital productivity growth was not encouraging due to gross under-utilisation of installed capacity in the dairy plants.

Impact assessment

2015-16

A field level study analysing the impact of prepared compound cattle feed (CCF) on productivity and profitability of milk production showed that the adoption of CCF was 50-60% in Haryana and Punjab and 60-80% in West Bengal and Odisha. In the northern India, the milk yield of crossbred cows fed with CCF was 16.8% higher than those not fed with the same, while the corresponding percentage was 62% in Eastern India. The adoption of CCF generated an economic surplus of over `44000 million in Eastern India, while in Northern India, due to the unfavourable milk-feed ratio, the technology can generate a positive economic surplus only if there is a decline in feed cost by `3/animal or additional increase in milk yield by 100 grams.

2016-17

Semen sexing is a promising technology to deal with the problem of growing number of animals of unwanted sex that are male animals in Indian context. An ex-ante evaluation of the technology was undertaken in Punjab and Haryana, wherein under the alternative animal management scenarios, the quantification of benefit of sexed semen has been done in terms of more milk production due to larger female herd. The net present value of the benefits from semen sexing technology was estimated at `24.10 lakhs per 100 heifers under best management practices. Given the difference in cost of sexed semen and its lower conception rate compared to the unsorted semen, the economic viability is discernible only on the farms that have ideal management practices. The non-viability in case of good and moderate practices gives a clear message that the focus of the Government on promoting sexed semen in India should be backed by efforts to improve estrus detection and conception rate at field level without which there would be no economic rationale for its adoption.

2017-18

A comparative analysis of technical efficiency of cooperative member and non- member dairy farms in Gujarat brought out that cooperative member farmers (83.27%) were more efficient than the non-member (75.31%) farmers. The small farmers (81.59%) were most efficient across all herd size. In the case of cooperative non-member farmers, the estimated efficiency score had a negative relation with the herd size. As the size of herd increased, the technical efficiency decreased. The overused resources were green fodder and dry fodder among all the inputs taken into consideration. The technical efficiency of farmers can be significantly improved by providing more access to information, increased non-farm income and promotion of dairy cooperatives. The non-members in the study region preferred to sell milk output to the private sector or directly to the end-users because of remunerative price.

Value Chain

2015-16

The studies conducted on the compound animal feed value chain in two different dairy production environments in the country, viz. dynamic (Punjab and Haryana) and transient (W.Bengal and Odisha), indicate that each of the six major stakeholder groups in cattle feed value chain, viz., major feed input suppliers, minor input supplier, feed producers, feed marketers, service providers and dairy farmers, require technical and/or policy support to enhance their economic performance. The value addition ranged from `2550-3200/tonne of compound cattle feed in the dynamic region and was higher (`3950-4650/tonne) in the transient region.

The major weaknesses in the value chain that have to be overcome are, high susceptibility to seasonal price fluctuations, lack of adequate quality control, low responsiveness of milk productivity to feed product under field conditions and inadequate storage facilities. There is lack of capacity to use the financial tools to hedge the price risk arising due to high volatility in prices. The key interventions for upgradation, management and development of the cattle feed value chain in the country have been outlined in four major heads: quality assurance and feed safety, maintaining profitability, capacity and skill development and value chain financing.

The study on value chain of milk and milk products in milk-shed areas of Ballabhgarh and Sirsa milk plants in Haryana, showed that marketed surplus of milk was 76-79 percent of production. The cooperative dairy plants were collecting milk from the farmers, at an average procurement cost of about `1.65/litre and processing them into various value added dairy products. The profit margin was highest in Dahi (>30%) and lowest in paneer (<3%). The milk plants were earning a margin of 9-13% on pasteurized full cream milk (6.1 % Fat and 9.0 % SNF), while the milk producers get a margin of 6-7% on sale of raw milk of same composition, indicating that processing of milk is profitable than the production. The milk producers under the cooperative structure get more than 70% share in the consumers’ rupee

Total factor productivity of organised dairy industry: All India

Enhancing farm income and employment

2015-16

In the state of Maharashtra, Western Maharashtra was the most developed region with the highest index value and Vidarbha was the least developed region with the lowest index value over the years. The key regional priorities for balanced development were identified as: i) Focus on increasing milk production by improving livestock support services in Konkan region, ii) In Western Maharashtra feed and fodder is major concern, so focus should be on non conventional feed, balanced ration and for the development of new compound cattle feed industry, iii) Milk marketing is major concern for Khandesh and Marathwada region, iv) Except grazing area, all other indicators are weak in Vidarbha region, which shows the failure of government schemes, so there is need to have public private partnership in this region to increase the efficiency of livestock support services which ultimately develop dairy sector and reduce disparity in dairy development.

In the state of Rajasthan, the issue of balanced regional development was addressed for normative allocation of the investment resources across its agro-climatic zones. For balancing the efficiency, equity and sustainability criterion for livestock development in the state, the top two zones that require ardent policy attention are, Arid Western Plains and Southern Plain and Aravali Hills, where nearly 43% of the resources for livestock development should be invested. The topography of the arid western plain is such that establishing mobile veterinary and health care facilities is needed to cover the vast stretch of the area. The Southern Plain and Aravali Hill region has 44% deficit of feed and fodder resources, which is also reflected in the high yield gap in milk and wool production. The next zone in terms of investment priority, is also from southern part of the state. The region requires instantaneous policy attention to improve livestock productivity through technological advancement, labour productivity by training them in scientific livestock farming practices, and introduction of value-added products for enhancing calorie intake.

Dairy inputs and livestock support services

2017-18

With the commercialization of dairy farming, demand for green fodder is increasing and farmers are taking up fodder production as a commercial business, which has created a need for effective and efficient marketing system. The study in Haryana estimated overall total cost of cultivation (cost C) for major green fodder crops- sorghum, maize, bajra, and berseem as `49,603/ha; `54,983/ha, `55,672/ha and `56,832/ha, respectively. The overall gross returns for sorghum, maize, bajra, and berseem was found to be `1,06,285/ha; `1,24,207/ha, `1,38,320/ha, and `1,82,139/ha, respectively. The most common problem faced by the farmers and traders was lack of proper market place followed by loss of green fodder by stray animals. Some farmers were also facing problems related to price of output and transportation because of distant location of fodder markets.

Demand analysis and price analysis

2017-18

Consumption pattern and consumer preferences were studied for fermented probiotic dairy products in metropolitan Delhi. The respondents across all the income groups preferred a probiotic drink worth `22 in container size of 200 ml each available in pack of five at local stores with a health claim of daily immune booster. In case of probiotic dahi, the most preferred attribute combination across all income groups was a product priced at `32 available in container size of 400g at milk parlors with a health claim of enhanced digestion.

Another study on consumption pattern analysis for milk and milk products was conducted in Kolkata metropolitan. The consumption of ghee, paneer and butter was found to be among 61.50%, 28.5% and 31% households. Conjoint analysis showed that price contributed to the largest percentage (52.02%) of the preference rating of rasogolla consumers while brand of rasogolla contributed to the percentages (58.35%) of the preferences rating and quantity of ghee had lowest importance (8.5%). Most important attributes for milk to the consumers’ was fat level (40.06%) followed by utilization (36.89%) and quantity (14.66%) of milk.

During 2005-2016, CAGR of inflation adjusted (real) procurement and retail prices of milk in Karnataka were 1.4% and 3.6 %, respectively, indicating that the rate of growth of procurement prices of milk was not at par with the retail prices of milk. The rise in the real retail prices of milk and curd was 6% to 7 %. The trends in the prices of butter and ghee had more volatility with the CAGR of 3% and 4.1%, respectively. The CAGR of feed was around 6%. The Fodder Price Index was notably higher than the CAGR of procurement prices of milk. Among the various univariate and multivariate candidate models for forecasting the procurement and retail prices of milk, the Vector Auto Regressive with lag period one- VAR (1) model was the most appropriate model. The predictors in the VAR (1) were its own previous year milk prices, previous year values of feed cost and agriculture labour wage

r study on consumption pattern analysis for milk and milk products was conducted in Kolkata metropolitan. The consumption of ghee, paneer and butter was found to be among 61.50%, 28.5% and 31% households. Conjoint analysis showed that price contributed to the largest percentage (52.02%) of the preference rating of rasogolla consumers while brand of rasogolla contributed to the percentages (58.35%) of the preferences rating and quantity of ghee had lowest importance (8.5%). Most important attributes for milk to the consumers’ was fat level (40.06%) followed by utilization (36.89%) and quantity (14.66%) of milk.

Performance appraisal of dairy industry in India

2011-12

Industrial de-licensing in 1991 led to sharp increase (136%) in the number of dairy plants in the organized sector. Within the organized sector, in terms of number of plants, there was a structural change towards Private Ltd. Companies, but in terms of milk handled, the cooperatives continued to dominate. Milk processing in India is dominated by the unorganised sector, although after 2000-01, there has been a decline in number of unorganised dairy manufacturing units in the country. The own-account manufacturing enterprises, smallest sized units in unorganised sector predominate, but their number and share has been declining over time. The employment growth in the unorganised sector was high, but the real Gross Value Added per enterprise was slow.

Total factor productivity of organised dairy industry: All India

The Total Factor Productivity Growth in the organised segment increased at the compound annual rate of 7.18% during 1980/81-2008/09, yet the decadal trends show a slowing down of TFP growth. The states with high TFP growth are, Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh; slow growth in TFP has been estimated in Kerela, Maharashtra, Punjab, and Uttar Pradesh; while in Haryana, Tamil Nadu and West Bengal the TFP growth has been negative. The mean Technical efficiency score worked out to be 0.86, implying that substantial possibility of increasing the output by improvement in efficiency levels exists in the dairy industry. In organised milk processing sector, the growth in real value of output per factory has slowed down drastically from compound annual rate of 8.66% during the 1980s to 1.53% during the 1990s and further to 1.06% in the on-going decade. Post 1990s increase in net value added received a sharp setback during the global economic crisis. Similarly, the real profits that had picked- up after 1999-00 registered a steep decline during global crisis. The growth in labour productivity was positive in the organised sector, but the capital productivity growth was not encouraging due to gross under-utilisation of installed capacity in the dairy plants.