V. Socioeconomic Profile of Sample Households

This chapter discusses the demographic characteristics of selected households, asset ownership patterns, milk production, consumption and marketing practices, animal health and breeding practices, and access to inputs and resources.

5.1 Demographic Characteristics

Important socioeconomic characteristics of sample households are presented in Tables 5.1 and 5.2 for the north and west regions, respectively. The average family size of the surveyed households was six members per household and did not vary significantly across size classes and regions. The age structure of households indicates that the average age of head of household also did not vary significantly across regions; however, average age of commercial dairy farmer was lower than other categories of farmers, which indicates that young farmers have a strong preference for milk-production activity. About half of the population was in the age group of 40 and older. The education level (number of schooling years) was slightly higher in the western region and showed a direct relationship with the size of holdings. Almost all the households in the sample were male-headed. Education plays an important role in the adoption of innovations/new technologies, and young farmers are expected to be early adopters. Over 90 percent of households in the western region and nearly two-thirds in the northern region were literate. The literacy ratio was higher in male-headed households than in female-headed households in both regions.

The selected households had fairly long experience in dairy farming, and farmers had, on average, 20 years of experience in milk-production activity, which shows that the majority of the farmers in rural areas have been integrating their crop and milk-production activities (Table 5.3). More than one-third of the commercial farmers had less than 10 years of experience. These commercial farms are driven by demand-side market factors such as increasing demand for milk and dairy products in urban areas, easy access to inputs/resources, and better market opportunities. In contrast, the smallholder dairy farming system in rural areas is closely interwoven with crop farming as a subsidiary occupation based on crop residues/by-products and using male bovines for draft power and transport and dung as manure in fields or as fuel for cooking.

Table 5.1 Demographic characteristics of sample households: Northern region

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.2 Demographic characteristics of sample households: Western region

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

There are striking differences in primary sources of occupation across different categories of farms and regions (Table 5.4). A large proportion of small households (42%) in the northern region were wage earners/farm laborers, while in the western region about 44 percent of smallholders had dairying as their primary occupation. The spouse of the head of household largely takes care of milk-production activities on small farms. In the northern region, crop farming was a primary occupation; in the western region, the majority of the farmers had dairy farming as a primary occupation. This is due to differences in agricultural development between these two regions. However, in the case of commercial farms, milk production was the main occupation in both regions.

Performance of a household also depends on access to infrastructure. Milk being a perishable commodity, good access to market is of paramount importance. We have analyzed the information on average distance to milk collection centers, the nearest market, and roads as an indicator of infrastructure (Table 5.5). Access to milk collection centers is better in the western region, where about 95 percent of the households have easy access, mainly due to the good network of dairy cooperative societies. In the northern region, the commercial farms are slightly distant from milk collection centers but close to markets. The average distance to a paved road was also shorter in the western region than in the northern region.

Table 5.3 Experience of households in milk-production activities

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.4 Distribution of households according to main source of occupation

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.5 Distance to market, milk collection center, and road

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

5.2 Asset Ownership and Distribution

Land is an important asset of farmers, although in the case of dairy production, purchased or exchanged feed and fodder can be substituted for land holdings. The average size of land holdings was smaller (1.06 hectares) in the northern region than in the western region (1.85 hectares). It ranged from about 0.43 hectares in the case of small farms to about 2.60 hectares in the case of large farms in the northern region (Table 5.6). In the western region, it ranged from 0.85 hectares for small farms to 4.08 hectares for commercial farms. However, land productivity in the northern region is higher than in the western region due to better irrigation facilities and other resources. Most of the commercial farms are landless and highly dependent on market-purchased feeds and fodder.

Table 5.6 Land ownership pattern in sample households

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

The size distribution of households showed that about 42 percent of households in the north and 38 percent in the west had less than one hectare of land for cultivation (Table 5.7). More than one-fourth of smallholder dairy farmers in the north were landless laborers, while the share of such households in the western region was 11 percent (Table 5.8). Nearly 26 percent of households in the north and 17 percent in the west had taken land on lease from other farmers. The terms of lease were mainly a fixed amount per unit of land and varied depending on the quality of the land. Only a small proportion of households rented out their land, mainly due to small landholdings.

Table 5.7 Distribution of selected households according to farm size

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.8 Proportion of farmers leasing-in and leasing-out land

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Farmers grow a variety of crops in the study area. (Table 5.9). In the western region, rice (17%) is a main crop during kharif season and wheat (19%) in rabi season, accounting for nearly two-thirds of the total cropped area. Bajra and cotton were two other important kharif crops, occupying about 11 percent of gross cropped area. Jowar, maize, and lucern were important fodder crops. The average area allocated for fodder crops ranged from about 13 percent on small farms to about 22 percent on commercial farms.

The cropping pattern in the northern region is also dominated by rice in kharif and wheat in rabi season, accounting for over three-fourths of the gross cropped area. The area under fodder crops ranged from 8.7 percent on small farms to about 20 percent on commercial farms, with an average of 13.4 percent for all categories. Maize, jowar, and berseem were important fodder crops. In addition, farmers grow berseem (fodder) as a mixed crop with mustard in the region.

Livestock is an important component of farming systems in India. The distribution of the bovine population in the selected households in given in Table 5.10.

Table 5.9 Cropping pattern in the study area

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

The average number of animals per household varies with the size of the farm; however, there were striking differences in terms of milk animal population composition across regions and categories of households. Buffalo was a main source of milk production in the western region, but its importance differed across farm size. Among small and medium farmers, about 90 percent of milk animals were buffaloes, while large farmers kept about 79 percent milk buffaloes and 21 percent crossbred cows. In the case of commercial farms, buffaloes constituted about two-thirds of milk animal population; the rest were crossbred cows. In the northern region, the share of crossbred cows was higher than buffaloes. Buffaloes constituted about 32 percent of total milk animal population. Commercial farmers' herd composition consisted of about 32 percent buffaloes and 68 percent crossbred cows.

Table 5.10 Average number of bovines in the study area

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

More than half of the selected households had 1-3 milk animals; fewer than 10 percent kept more than 15 milk animals (Table 5.11). In India, about 70 percent of households keep one to three milk animals, and there are very few large herds. Since the objective of this study is to examine the impact of livestock industrialization on the welfare of rural households, we purposely selected households with large herd sizes. In certain villages, it was difficult to find dairy farmers with 10 or more milk animals; however, in parts of Punjab and Haryana, the average size of dairy herds has increased significantly during the past few years. Since no reliable data are available at the state or national levels about changes in the structure of dairy herds, we tried to get some estimates from the selected households about the changes in herd size milk over the past 15 years on the basis of respondents' memory (Table 5.12).

The average number of animals kept by smallholders did not change much during the last two decades, and ranged between two and four. Two of the reasons given by the respondents were shortage of land for growing fodder crops and market-related problems. Similarly, in the case of medium farmers, there was not much increase in dairy herd size. However, there appeared to be a ramping-up of herd size in large and commercial farms during the 1990s, especially in the case of commercial farms. These estimates are on the basis of the memory of the respondents, and therefore need to be interpreted carefully and not generalized.

Table 5.11 Distribution of households according to milk animal herd size

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.12 Changes in dairy herd size: 1980s and 1990s (1980-2002)

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

The performance of milk animals depends on many factors, such as genetic potential, quality of feed, availability of animal health and breeding services, and management practices. Production traits of milk animals play a crucial role and have a profound influence on the cost and returns of any dairy enterprise. Important traits such as age at first calving, lactation length, dry period, and milk yield per animal on different categories of farms are given in Tables 5.13 and 5.14.

The late maturity of dairy animals, resulting in high cost of rearing animals to the age of first calving, was one of the major causes for the uneconomic nature of dairying in India. The age at first calving is governed by biological factors such as age at maturity and conception rate, which are again influenced by breeding, feeding, management, and environmental factors. The average age at first calving was higher for buffaloes than for crossbred cattle. In general, for the study area as a whole, the average age at first calving for buffaloes and crossbred cattle was found to be 43 and 33 months, respectively, in the northern region; the corresponding figures for the western region were 45 and 35 months. In general, the age at first calving of buffaloes and crossbred cows was less in the small and commercial groups of farms.

The lactation length affects total milk production and, consequently, the returns from dairy animals. A prolonged dry period puts the dairy farmer at a disadvantage, since the animals must be fed and taken care of during this period, increasing the cost of maintenance. The inter-calving period is the sum of in-milk and dry days or the period between two successive calvings. Short inter-calving periods lead to higher numbers of lactations in the productive life of animals, which result in higher income from the sale of milk and calves. In some cases, farmers may choose to extend lactation beyond the economically optimal period due to need for cash flow or perceived risks associated with calving.

Table 5.13 Economic traits of milk animals on selected households

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

The average lactation length in buffaloes was about 352 days in the northern region and 340 days in the western region. The dry period ranged from 112 days in the Northern region to 134 days in the western region. In the case of crossbred cows, the lactation length did not vary significantly across regions or categories of farms. The average lactation length ranged from 287 days in the northern region to 275 days in the western region. There has been a marked decrease in dry periods and inter-calving periods in both buffaloes and crossbred cows, which may be attributed to improvement in farm-level technological management and access to breeding services.

The quantity of milk production on a dairy farm does not depend on the total number of animals in the herd but on the number of animals in milk. The higher the proportion of animals in milk, the lower the cost of milk production. The proportion of animals in milk was generally higher in commercial farms than in small and medium-sized farms.

The productivity of milk animals is of vital importance to livestock owners because it has a direct influence on costs and returns. Therefore, the average milk yield of lactating animals was worked out (Table 5.14). The average milk yield per day of lactating cows and buffaloes was higher in the northern region than in the western region. The average productivity of crossbred cows was significantly higher than that of buffaloes. Commercial farmers have marginally higher yields in the northern region, while in the western region there were not large variations across different size groups. One of the reasons for less variation in the western region could be good networking of cooperatives, which are more beneficial for small farmers in terms of access to output markets and animal health care facilities. There are flush and lean seasons in milk production, which differ for cows and buffaloes. The average productivity during a lean season is substantially lower than during a flush season. The average productivity in cows during a flush season was as high as 16 liters in the western region and 15.2 liters in the northern region.

Table 5.14 Average milk yield per lactating animal in different categories of households (liters/day)

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

5.3 Milk Production, Consumption, and Disposal Patterns

Milk is an important and comparatively cheap source of nutrition in rural areas of the country. The smallholder dairy farming system provides a variety of outputs, such as milk, organic manure, draft power, and cash income. The farmers retain part of the milk for home consumption (liquid milk and milk products) and sell the rest in the market to get cash income. The milk production, consumption, and disposal pattern is given in Table 5.15. The average milk production per household has a direct relationship to farm size. The average share of milk sold is higher in the western region than in the northern region. The average per capita consumption of milk per day is higher in the northern region than in the western region owing to dietary habits. In the western region, some of the farmers sell a large proportion of their milk to dairy cooperatives and purchase ghee (clarified butter) from them for home consumption, because when ghee is made through traditional methods at home there is waste of by-products that can be used in the modern dairy product manufacturing plants. This has all happened due to the efforts of cooperative organizations in the area. In the western region, smallholders sell about 88 percent of total milk produced, which is higher than the northern region (68.2%). Part of this difference might be distress sales due to the need for immediate cash (based on informal discussion with sample households). The share of milk sold was high among commercial farms, mainly due to their larger production base and more market-oriented production objectives.

Table 5.15 Milk production, consumption, and disposal pattern (liters per day)

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

The average per capita availability/consumption of milk and milk products was much higher in the northern region (1,016 grams/day) than in the western region (700 gm/day). The average per capita consumption ranged from 560 grams per day for small households to nearly 1,100 grams for large households. The average per capita consumption in the western region was lowest (380 grams/day) among smallholders and highest among commercial farms (766 grams/day). These consumption estimates might be slightly high, as we could not get information about quantity of milk and milk products given as gifts to neighbors and relatives, which is a common practice in rural areas.

Information on the average milk yields on the day before the survey and information about the prices received by the sample households is summarized in Table 5.16. There was no significant difference in buffalo milk yield between the northern and western regions, but there were variations across different sizes of farms. The difference in cow milk yield was significant between the regions. The average price received by the household for buffalo milk was about Rs. 11.6 per liter in both regions, while the price received for cow milk was higher in the northern region. However, this table gives more insights about the organizational structure of the dairy sector. One of the interesting points that is evident from Table 5.16 is that smallholders get lower milk prices in the northern region than in the western region. The explanation for this could be the strong presence and networking in the western region of cooperatives, which do not discriminate between small and large producers and procure milk at a price based on fat and solid-not-fat (SNF) content, irrespective of quantity of milk sold. In the northern region, the presence of the organized/cooperative sector is very limited and producers are at the mercy of the unorganized sector, mainly consisting of milk vendors/dudhias, which give smallholders less bargaining power. One of the important inferences that could be made from this observation is that in order to protect smallholder milk producers, farmer-managed organizations and links between producers and processors through formal or informal contracts should be promoted.

Farmers sell milk to different agencies; important marketing channels are presented in Figure 5.1. In the western region, dairy cooperatives are a major agency for procuring milk from farmers; however, a small proportion of milk produced is also sold to consumers, sweet shops, milk vendors/dudhias, and private dairies. The proportion of dairy farmers selling milk to the unorganized sector is quite high and accounts for a large share of marketed surplus in the northern region. We investigated the reasons for selling to a particular agency. The household was asked to rank the first three important reasons for selling milk to a particular agency, and weights were assigned per the importance of the reason (most important = 3; second important = 2; least important = 1). An index was constructed on the basis of these weights. The results are given in Table 5.17. Dairy farmers in the northern region cited price as the most important reason for selling milk to a particular agency, followed by timely payment. In the western region, regular procurement (2.45) was the most important factor in choosing the marketing agency, followed by timely payment (2.33) and provision of animal health and breeding facilities (2.12). One of the important points is that farmers in the western region did not consider the price received as an important factor. Other, less important, reasons given by households for selling milk to a particular agency were correct measurement, pricing based on fat and SNF, provision of credit, and advance payments.

Table 5.16 Productivity levels and prices received by farmers

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Figure 5.1 Milk marketing channels

Farmers were also asked about their future plans to increase milk production. Fewer than half the farmers in the northern region planned to increase milk production, while the proportion of households planning to increase milk production in the western region was very high (82%) (Table 5.18). There, the proportion of farmers reporting plans to increase milk production had an inverse relationship to the size of household, which might be due to relatively large herd size among the large and commercial farmers in the study area. Farmers who had plans to increase milk production were asked to give three important ways to increase milk production, and an index was constructed. In the western region, feed and fodder availability is a factor in expanding milk-production activities (2.36), followed by better management practices (2.27). In the northern region, farmers had plans to increase milk production through better management, and their preference for buffaloes was quite evident (Table 5.19). Farmers in the study area had good milk animal breeds, so breed improvement does not seem to be an important issue in either region.

Table 5.17 Reasons for selling to a particular agency

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Table 5.18 Households' plan to increase milk production (%)

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

Finally, farmers were asked to rank the three most important constraints in dairy farming they had experienced, and an index was constructed for different farm categories. The constraints were categorized into technological, marketing, institutional, infrastructure, diseases, feeds, and environmental constraints (Table 5.20). In the western region, shortage of feed-particularly fodder-turned out to be the most important constraint (2.40), followed by institutional constraints (2.20) and incidence of animal diseases (2.12). In the northern region, technological constraints were the most important (2.71), followed by institutional constraints (2.40), and infrastructure (2.39). The institutional and infrastructural problems were mostly related to the quality of infrastructure and institutional services in general and public sector utilities in particular. Environmental issues were at the bottom of the list.

Table 5.19 Ways to increase milk production

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003

Table: 5.20 Constraints perceived by farmers in dairy farming

Source: IIM/IFPRI India Dairy Field Survey, 2002-2003.

5.4 Animal Health, Breeding, and Extension Services

Livestock services come mainly from the State Department of Animal Husbandry, supplemented by cooperatives, the private sector, and non-government organizations. There are veterinary polyclinics, veterinary dispensaries, first aid veterinary centers, and mobile veterinary dispensaries in the country that provide animal health care and breeding facilities. In addition, certain central and centrally sponsored schemes/projects, such as the Intensive Cattle Development Project (ICDP), provide services to farmers. The veterinary institutions deliver curative veterinary services for all species of livestock and artificial insemination (AI) for cattle and buffaloes. All services offered by the department are delivered at the center, and livestock owners have to take their animals to the center for treatment or for AI services. All services offered by the department are supposed to be free or subsidized, but a study by Ahuja et al. (2001) revealed that farmers pay a fairly high price for all these services, and the quality of the services is poor. Budget constraints have reduced government support to these institutions for salaries and establishment costs. The Department of Animal Husbandry spends nearly 95 percent of its annual budget allocations (public funds) on salaries and establishment costs.

In the northern region, government veterinary hospitals are the most important providers of animal health and breeding services. Some of the farmers are also getting these services from the private sector and, to a limited extent, from cooperatives. Farmers are getting information about prices, markets, and feeding and management practices through personal contacts, followed by government extension agencies, state agricultural universities, and traders/intermediaries. In the western region, a majority of the sample households receive these services from the dairy cooperatives and the State Department of Animal Husbandry; a few private sector veterinarians supplemented these efforts.