Comparative Profitability of Small and Medium Sized Dairy Farmers in Punjab

Abstract

Dairying is emerging as a savior of small and medium dairy farmers. It was found to be contributing about 85, 50 and 34 per cent to the total family income in case of landless, marginal and smallholders respectively. In Punjab, the combined share of landless, marginal and small landholders in total milk production was only 39 per cent. Small farmers who provide nearly 33 per cent of the total state milk production thus constitute a significant chunk of the total milk supply; still rely on the traditional marketing channels. This inevitably needs the immediate inclusion of small and marginal farmers into the organized marketing framework. Present study is an attempt to evaluate the penetration and profitability of modern marketing channels vis-a-vis the traditional ones with a descriptive cross-sectional (small and medium scale dairy farmers), cross-seasonal (summer and winter) and spatial (three agro-climatic zones of Punjab state) research design. Scrutiny of season wise analysis concluded that the profits earned by both small and medium sized dairy farmers were higher in summer in all channels. The most profitable channel was Channel-I (Producer-Consumer) but out of the remaining four channels, Channel-II (Producer-Co-operative milk plant-Consumer) was second most profitable and efficient. The study suggested that to sustain small and medium dairy farmers, higher prices of milk and cheaper inputs should be given to producers to increase their profit margin. Promotion of collective action (Hub Approach) as an institutional vehicle for linking small farmers to large co-operatives may also help farmers in identifying more profitable channels.