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A Comparative Economic Analysis of Local Breed and Cross Breed Milk Cow in a Selected Area of Bangladesh

R K Mondal
Department of Agricultural Economics, Sher-e-Bangla Agricultural University, Dhaka-1207

S Sen
Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh-2202

S J Rayhan
Department of Management and Finance, Sher-e-Bangla Agricultural University, Dhaka-1207

Abstract/ Executive Summary:

The present study was undertaken to investigate and compare the socio-economic characteristics and relative profitability of local breed and cross breed dairy cow rearing farmers. The focus of the present study was to quantify the costs and returns and to explore the interrelationship of factors affecting yield, cost and net return for the local and cross breed cows and also compare these with each other. On an average, local and cross breed dairy cow owners possessed 4.93 and 4.76 animals per household respectively. Per day total costs of rearing per local and cross breed cow were Tk.32.85 and Tk.71.23 respectively. Feed cost constituted about 58 percent of total cost for local breed cows while it was 62 percent for cross breed cows. Paddy cost occupied the largest share out of total feed cost in local breed cows. The average milk yield per day per cow was 1.89 litres and 7.68 litres for local breed and cross breed dairy cows respectively while the total return per day per cow was estimated at Tk.58.27 and Tk.224.76 for the same and the net returns per day per cow were Tk.25.42 and Tk.153.53. The study revealed that green grass, concentrate feed, labour cost and capital cost have significantly positive impact on milk yield for cross breed cows but all the inputs other than labour cost and capital cost have positive impact on milk yield for local breed cows. It was further observed that the resources were not efficiently used by both local breed and cross breed farms. It may be concluded that both local and cross breed dairy cow owners had a scope to reallocate their resources. However, it was found from the study that profitability of cross breed cows was higher than that of the local breed cows. The study identified some major problems and constraints as reported by farmers which were: lack of grazing land, lack of veterinary care and services, high price and scarcity of feed and fodder, low price of milk, etc. Finally, policy implications of the study were suggested.

Keywords: Profitability, Returns to scale, Resource use efficiency, Net return

Location: Kalihati Sadar, Nischintopur, Hamidpur, Khilda and Munshi para of Kalihati upazila in Tangail district

Start Date: 00-03-2008

End Date: 00-04-2008

Program Area: Socio-economic and Policy

Commodity: Cow

Objectives:

1. To measure and compare the profitability of milk production of local and cross breed milk cows. 2. To determine the efficiency of various inputs used by local and cross breed dairy rearing farms. 3. To identify the problems related to rearing of dairy cows and to make policy recommendations for better economic performance.

Methodology:

Five villages namely Kalihati Sadar, Nischintopur, Hamidpur, Khilda and Munshi para of Kalihati upazila in Tangail district were purposively selected as the study area. The farmers who have at least one milking cow of these villages constituted the population of the study. Total 60 sample farmers were selected randomly of which 30 were local breed owners and the other were cross breed owners. Data were collected by using a pre-tested interview schedule by the researchers during the months of March, 2008 to April, 2008. In this study cost items consist of feed, labour, housing, veterinary, others cost and cost of capital that is interest on value of cows. The total cost per cow per day was calculated for both local breed and cross breed cow in the study areas. Calculation of costs and return of dairy cows by lactation could be a worthwhile proposition. Generally a lactation period prolongs for 10 months for cross-breed cows. The purchased feeds were valued according to the average prices actually paid by the dairy cow owners. Home supplied or own feeds were also charged according to the average prices prevailing in the market. Veterinary cost was calculated by taking into account the actual cost incurred by the farmers. Doctor’s fee and medicine were two major components of the total veterinary cost. The cost of housing was calculated by taking into account the depreciation cost, repairing cost and interest on average value of animal shed. Per day per cow housing cost was calculated by dividing total housing cost for a year by 365 and number of cows in a herd. Capital cost was measured in the present study as the interest on the average value of dairy cows. It is assumed that the dairy cow owners had purchased the cow just before calving and sold it after one year. The returns from dairy farm consisted of value of milk sold, values of cowdung, net changes in inventory, return from other purpose uses and return from calf. The returns from milk were calculated on the basis of the average quantities of milk yield per cow and average price received per litre of milk. Returns from cowdung were found out by taking average price at which cowdung was sold in the study areas. The returns from calf were calculated by dividing the value of calf by the age of the calf in number of days during the period of data collection. Both tabular and statistical techniques were used to find important relationships among the relevant variables. The Cobb-Douglas production function model was used to determine the effects of key variables. The resources are considered to be efficiently used when the ratio of marginal value product (MVP) to marginal factor cost (MFC) approaches one, or in other word, MVP and MFC for each input are equal. Marginal value product (MVP) is obtained by multiplying the marginal physical product (MPP) by the market price. Marginal factor cost (MFC) is the price of one unit of input. To identify the most important variables in the production process of milk production of dairy farms, the following specification of the model was made: Y= aX₁i b₁ X₂i b₂ X₃i b₃ X₄ib₄ X₅i b₅ + Ui The Cobb-Douglas production function was transformed into following logarithmic form so that it could be estimated by the ordinary least squares (OLS) method: In Y= In a +b₁ In X₁i + b₂ In X₂i + b₃ In X ₃i + b₄ In X₄i + b₅ In X₅i + Ui Where, Y= Value of average milk yield per cow per day (Taka), X₁= Cost of paddy straw used per cow per day (Taka), X₂= Cost of green grass per cow per day (Taka), X₃= Cost of concentrate used per cow per day (Taka), X₄= Cost of labour used per cow per day (Taka), and X₅= Capital cost used per cow per day (Taka), In = Natural logarithm, a = Intercept/ Constant, bi= Production coefficients; and Ui = Error term.

Source of Information: J. Sci. Foundation, 8(1&2): 23-29, June-December 2010; ISSN 1728-7855

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

It can be concluded from the study that, though dairying faced some constraints, but it was a profitable enterprise. If proper remedial measures could be taken, dairy farming could be a viable commercial enterprise which in turn could play a vital role to overcome the problems of low income, unemployment, under nutrition and unfavorable balance of payment situation of the country. The studies also revealed that, rearing of cross breed cow were more profitable than local breed cows. The policy maker should, therefore, extend more policy supports, which will encourage expansion of dairying and thereby, will contribute to increase milk production in the area and in the country as a whole.

Knowledge Management: Journal