This study served two purposes; firstly, to gain insight into the
household and farm economics of small-scale dairy farmers in Andhra
Pradesh, India, and to obtain estimates of their costs per unit of
output in milk production and secondly, to explore the potential impact
of dairy development interventions on household incomes, returns to
labour and costs of milk production.
The study applies a method of economic analysis developed by the
International Farm Comparison Network (IFCN), which is based on the
concept of 'typical farms', to assess the potentials of dairy
development in the Indian state of Andhra Pradesh. The state was divided
into two zones with distinct levels of milk production densities: a high
and a low density milk production areas. Three broad farm types were
selected to represent typical farms from each of these regions: landless
farming systems with 1 local cow or buffalo, small farmers with 2 to 3
buffaloes and commercial farms with 11 to 14 cows or buffaloes. Farms
with 2 to 3 dairy animals and 1 to 2 ha land represent the most common
farm type found in the state. Each farm is described in detail with
assets, production costs, profits and other economic information
presented both graphically and in the text.
The farm-level impact of over 40 potential dairy development
interventions covering feeding, breeding, animal health and milk
marketing on a typical 3-buffalo farm was assessed through an iterative
process that combined detailed household and farm simulation with expert
and farmers' opinions and feedback.
Given that resource-poor farmers are, by necessity, risk avoiders, dairy
development programs must simultaneously improve the financial
performance as well as the risk profile of the targeted farms. However,
few dairy development programs are conceived to comprehensively address
a wide range of factors, which may explain the reluctance of smallholder
dairy farmers to participate. Therefore, the authors propose that
existing programs need to partner and build on each other and show that
complementary programs can effectively lift small dairy producers out of
poverty through a competitive dairy farming business, which provides not
only an excellent wage level under local conditions, but which is also
well-positioned against international competition in a global economy.
An eight page executive summary is also available in addition to this
PPLPI, FAO, Rome, Italy, iii+73 pp.