DISCUSSION
Accounting for the Diversity
in Dairy Farming
Nilabja Ghosh
“Economics of Dairy Farming in
India” by M Dinesh Kumar and
O P Singh (EPW, 14 October 2017),
provided an analytical and
conceptual critique for a special
article co-authored by the current
author, “Do Producers Gain from
Selling Milk? An Economic
Assessment of Dairy Farming in
Contemporary India” (EPW, 24
June 2017). The author reiterates
some of the issues implicit in the
special article in order to
stimulate further questions on
these issues.
Nilabja Ghosh (nila@iegindia.org) is with the
Institute of Economic Growth, New Delhi.
56
B
ias in regional coverage, “silence”
on some valuation issues within
a farming system approach, incon-
sistency with macro-tendencies, and negl-
ect of nutrition value were some of the
flaws pointed out by the discussion article,
“Economics of Dairy Farming in India”
(EPW, 14 October 2017), in the earlier
special article, “Do Producers Gain from
Selling Milk? An Economic Assessment
of Dairy Farming in Contemporary India”
(EPW, 24 June 2017) co-authored by the
author. Limitations and abstractions,
inevitable in any research, have been
transparently laid out in the special
article. All figures reported were “esti-
mates” and further research, surely,
can offer improvements. Moreover, the
broad objective of the article was to
capture some contemporary scenarios
of the dairy sector based on sample
surveys, rather than making any general
statement about the economic benefit
of the dairy sector in the country. And
the regional coverages and sample sizes
have been clearly documented in the
article for readers to make their own
inferences.
Although sample and sub-sample aver-
ages can help in summarising the key
indicators, these hardly dissemble the
heterogeneities within the sample. With
the methodology used in the article, it is
patent that northern India performed
better economically as compared to the
eastern states, but there are wide diver-
gences even within the northern region
as there are between the eastern states.
Delhi, for instance, stands out as most
profitable in dairy, but the benefits come
at a high ecological cost of maintaining
villages and livestock within the con-
fines of a congested city. Such cases
are likely to abound in other cities too.
Success stories on dairy are much more
commonly documented in research-based
MAY 4, 2019
reports, but the article exposes the vul-
nerabilities of the sector.
Cost and Revenue Estimations
Estimation of costs, particularly for farm-
grown and or unpaid inputs is extremely
important, as rightly emphasised in the
discussion article. However, it is stated
clearly in the methodology of our article
(Ghosh et al 2017) that our estimation
takes into account only the paid outcosts
incurred on purchased inputs, while the
costs of all farm-grown inputs, including
those appearing as by-products of the
farm, are excluded. Unpaid family labour,
too, is not included in the cost. The ap-
proach presumes zero opportunity cost
of such inputs, which is not improbable in
land-scarce regions (Kumar and Singh
2017). In the case of Bihar, for example,
our study found that green fodder (millets,
grass and jai) are often grown on flood-
prone lands that would otherwise remain
fallow. The rent paid for fodder land
if leased-in is, however, accounted for
(Ghosh et al 2017). Moreover, neither
pointed out in our article nor addressed in
the discussion article is the issue of esti-
mating the economic cost to society for
subsidised inputs, such as medicines, arti-
ficial insemination, and animal nutrients,
which are provided by public agencies.
In fact, our cost estimates of these inputs
in the study do not fully reflect the eco-
nomic cost to society.
This treatment of cost is admittedly
conservative and is open to adjustments.
If in real life some of these inputs are not
actually free to the producer or society,
this kind of valuation would generate
underestimation of cost. Dairy farming
would then be less profitable or more
loss-making than is suggested in the
article. Economic implications of dairy-
ing would be found to be even worse if
the method follows an extremely fastidi-
ous method of imputing market prices
for evaluating all inputs. Admittedly,
some of the returns in the output side
have also been lost sight of, but they
are merely incidentals. External outcomes
other than those mentioned in the article
(cow dung and urine) are also pointed out.
No commercial household processing for
vol lIV no 18 EPW Economic & Political Weekly

sale is reported by our respondents. While
the discussants have not spelt out their
expectations, a more rigorous approach
factoring in the non-market costs would
certainly generate lower returns than
those reported for the specific study and
thereby reinforce the conclusion.
The revenue clearly does not include
any imputed value of the milk retained
for household consumption. In its search
for an explanation as to why farmers
maintain animals despite the low mar-
ket returns, this (subsistence) motive is
speculated as the best possible reason
for producing milk. The potential cost of
procuring the same milk from the market
(mentioned in the paragraphs preceding
the concluding section) outweighs the
financial loss, suggesting that consump-
tion is cheaper via production than it is
through market. Not undermining the
nutritional significance of dairy farming
for the producers’ family, the article as-
sesses dairy from a commercial perspec-
tive and exposes the weakness of market.
Land and Dairy Intensification
According to the critics, in western states
like Gujarat, high input costs accompany
high revenue in intensive dairying even
with irrigated fodder cultivation, while in
semi-intensive dairy in northern India,
inputs are gathered from the farms. On
the other hand, in eastern India where
dairy is traditional, the discussants expect
both revenue and cost to be low, animals
to graze in the wild and family labour
and biomass to be abundant. Growth of
dairy is associated with developments in
marketing, price rises and other demand-
side factors, and with lower need for
land and water on the supply side. The
discussion concedes that smallholding
sizes hinder intensive dairy, though cereal-
based cropping patterns help to supply
feed. Positive results in the west and the
north are reported by several studies,
including a study by this author (Ghosh
2010). The survey in the eastern study
regions did not succeed in finding
enough “wild” common land available
for grazing to produce productive and
healthy herd of animals at a low cost.
Animals do graze within human habita-
tion and markets in search of food and
food wastes, but this observation is
Economic & Political Weekly EPW MAY 4, 2019
common in all the survey regions. Despite
all its regulations, even Delhi is no ex-
ception. The study finds higher returns
in Delhi where nearly all inputs are pur-
chased, but, in the other study regions,
the farming system remains a major
source of feed, though marketing channels
are different, and prices and returns
are lower.
Self-reporting of Cattle Breed
Information about the breed of the animals
is usually obtained from the farmers
who were in turn informed or misin-
formed about this by the animal sellers.
In Bihar, some of our respondent farm-
ers expressed doubt about the credibility
of the animal sellers’ information, when
their animals failed to catch up with
their yield expectations, notwithstand-
ing that inadequate nutrition could also
make hybrids less productive than antici-
pated. The rising regional trends in milk
production set against these findings are
intriguing. Other emerging models of
commercial production not covered in
the household survey may arguably be a
factor, but the rationale behind the trends
certainly deserves more exploration and
leaves room for research.
In Conclusion
Field interactions of authors and the
current debate further affirm the diver-
sity of dairy economics. Various models
of dairy farming are gaining visibility,
but, combined with the existing reality,
differentiated choices can be made at
the policy level. The current state of eco-
nomic reforms calls for a focus on the
areas of weaknesses, a review of dairy
as a policy for poverty alleviation rather
than business, and a rethinking on the
National Dairy Development Board’s
strategies in this light. The study finds
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vol lIV no 18
DISCUSSION
that at least some sections of dairy farmers
still linger at the margin of profit and
loss, and are still driven by subsistence
needs rather than commercial gains.
This is a matter of concern especially in
a transforming economy. As the pressure
on land resources mounts and markets
get integrated and formalised, like other
industries, dairying will have to be rooted
in its comparative advantage. Further,
dairy as an economic activity is not
merely associated with human welfare,
but also with ethical animal-rearing
practices. Stray quest for feed is not a
desirable model of animal husbandry.
Open meadow lands for grazing are a
basic entitlement both for animal welfare
as well as sustainability of animal hus-
bandry practices. Alternatively, govern-
ments must explore policy tools, includ-
ing viable livelihood generation to in-
crease the purchasing power of the poor
to meet their nutritional security. The
discussants (Kumar and Singh 2017) have
critiqued the article for the “lack of
familiarity with livestock farming” on a
subjective ground. While specialisation
is important in social science, consulta-
tion with varied interest groups and
disciplines is equally vital. Too much
dependence on familiarity can constrict
the vision of the study.
References
Ghosh, Nilabja (2010): “Economic Empowerment of
Farm Women through Viable Entrepreneurial
Trades,” consolidated report of coordinated
studies from Agro-Economic Research Centres
(AERC), submitted to Ministry of Agriculture,
Government of India.
Ghosh Nilabja, Amarnath Tripathi, M Rajeshwor
and Roopal Singh (2017): “Do Producers Gain
from Selling Milk? An Economic Assessment
of Dairy Farming in Contemporary India,”
Economic & Political Weekly, Vol 52, Nos 25–26,
pp 88–96.
Kumar, M Dinesh and O P Singh (2017): “Economics
of Dairy Farming in India,” Economic & Political
Weekly, Vol 52, No 41, pp 77–79.
57