Buffalo Dairy Farm in Pakistan

Presented by Muhammad Ikram Dhrejo

CMS ID # 163-17-0006

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Introduction

Agriculture is the second largest sector of Pakistan, contributing nearly 21% to the GDP and
absorbs almost 45% of entire labor force in the country. Livestock is the major shareholder
within the agriculture sector; having 159 million heads of animal population, it contributes
53.2% to the agriculture value-added, and continues to grow at the rate of 4% annually. Among
all livestock products milk is the most vital as it provides relatively inexpensive and easily
available animal protein and minerals (Bilal & Ahmed 2004). Annual gross milk production in
Pakistan has reached 45 million tonnes. Buffaloes contribute almost 60% to total milk production
in Pakistan (Ministry of Finance 2009).
World buffalo population has touched 188.3 million heads. According to an estimate 97% of
total buffalo population is found in Asia. After India, Pakistan with 30.8 million heads has the
highest buffalo population in the world. It has the low-input -low-yield production systems,
animals are mostly fed crop residues and straw based diets; whereas, occasionally supplemented
with some concentrate feeds(FAO 2010)(Bilal &Hameed 2009). Because of high butterfat
constituents in milk, buffaloes are consumer’s choice all over the country (Cain et al. 2007).
Punjab province enjoys well developed canal system and five rivers passing through, make it
natural habitat of buffaloes. Almost 60.8% of Pakistan’s buffalo population resides in Punjab
province (Afzal 2006). Typical farms in Punjab comprise of 2-6 hectares of land and a herd of 2-
10 animals (Cain et al. 2007).
According to Pro-Poor Livestock Policy Initiative, the rural farms with 10 animals are becoming
more common in Punjab, and these medium type farms have the capacity to transform into
commercial entities (Garcia et al. 2003) yet major problems like poor genetic potential, low
quality feeds, high risk of diseases, volatile markets, burden of non-productive animals, lack of
technical expertise etc.(Sarwar et al. 2002); are not well documented in terms of economic
parameters. The farm data recording and analysis system is poor to provide any reliable picture
of the system to the stakeholders. Hence, one could neither know nor predict the economic
situation of buffalo farming system. Present study targets medium size dairy buffalo farms in
Punjab to give a better economic picture for enhanced understanding as these farms have the
potential to convert into viable business units in near future.

Data Collection & Interpretation Methods

For data collection, nearly 150 farmers were visited and 26 representative farms were selected on
the criteria as follows:
1. Farmers have at least informal records in their expense books etc.
2. Farms represent typical situation in Punjab
3. Farmers are willing to share their income related details
Requisite information was collected through face-to-face interviews with farmers, consultation
with farm records and visit to the barns for the period of June 2008 to June 2009. Entire cost
related data was converted into Euro (€) and total milk production was harmonized to energy
corrected milk at 4% fat and 3.4% proteins. Calculated values of dairy enterprise were divided
by ECM of milk calculated.

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Questionnaire and Cost of Production (COP) analysis model of “European Dairy Farmers” was
used for data collection and interpretation. Whereas, data on current situation of Pakistani
dairies, was taken from historical trends and contemporary resources.

Milk Production & Disposal Trends

The herd size had direct impact on the gross production of the farms and averaged to 19 animals
per farm; strengthening the fact that region’s milk production is still based on higher number of
animal and not the production per animal. Milk production was observed to be around 2,702 kg
ECM per buffalo; fat and protein were recorded 6.50% and 4.22%, respectively.
On an average 50 tons of energy-corrected milk (tECM) was produced in the accounting period
with a range of 16 - 81 tECM per farm.
Marketable milk production stood 50 Figure 1: Milk Disposal trend at Buffalo
tECM and actual marketed produce was farms (%)
recorded as 43 tECM. These findings Marketed Milk Used at Farm Wastages
revealed that nearly 4 tECM was used at
the farm and about3 tECM was wasted
in the pre-marketing processes (Figure 6%
1). 8%

Similar results were reported in a study

conducted by FAO in 2003 in Punjab,
Pakistan, rural farms with average of 10
buffaloes produced 2,257 kg ECM and
sold almost 90% of their milk produced
(Garcia et al. 2003). However, some
Indian farms having 6 Murrah buffaloes, 86%
produced 1,437 kg ECM for the
accounting period that was much lower
than the production records of Pakistani
Nili-Ravi buffaloes (Saha et al. 2004).
Production on all farms was round the year and Figure 2: Land Ownership (%)
no seasonal trends were observed. Self Rented
3%
Farm Land Use

Total farm area averaged 7 hectares; land

renting trends were not very high and only
touched 0.21 hectares per farm (Figure 2).
However, the area being used for forage
production was 2 hectare. All the land was
arable and no permanent or temporary
grasslands were available. 97%
Stocking rate was fairly higher (10 buffaloes per
hectare) and land productivity averaged 26,265
kg ECM per hectare (Figure 3). Working paper on Pakistan’s small producers supports our
findings; stocking rate remained 9 to 13 units per hectare. But the milk production was reported
to be 15,495 kg ECM per hectare (Garcia et al. 2003). The higher values in present study might
be due to the latest advances in agronomic practices and modern feeding trends.
Dairy farms in Bangladesh were found
with similar trends of not renting lands Figure 3: Land Use
for agricultural systems while, per farm
Fodder Use Crop Use Stocking Rate
area ranged between 0.40-1.44 hectares.
The stocking rate in Bangla farms was as
high as 14 animals per hectare and 10 10
production in rural dairy farms was 9
recorded to be 25,454 kg ECM per 8
hectare (Hemme et al. 2004). Indian 7
farms in Orissa showed a trend of using 6
up to 0.23 hectare of land for dairy 5
production with a stocking rate of 6 units 4
per hectare. Milk production was found 5 3
to be 7,709 kg ECM per hectare (Saha et 2
al. 2004); this lower production as 1
compared to Pakistan might be due to
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genetic differences in the dairy animals 2 (ha)
Land Use
of respective countries.

General Management Outlook

Herd Management
Regional studies indicate that calves at typical buffalo farms are still a secondary product and
poor management practices often not only lead to higher mortality but also affect their growth
rate.
India and Bangladesh have a culling rate between 10-30% and 15-25%, respectively. Whereas,
calf loss of 20% (Saha et al. 2004) clearly indicates the real story behind. Delayed puberty, poor
conception rate and higher age of parturition are direct result of poor feeding practices.
Table 1 Selected herd indicators on dairy farms in Pakistan
Herd indicators
Age at first calving Months 37
Calving interval Days 443
Culling rate % 6.6
Lifetime yield Kgs per culled-cow 17,287
Calf loss % 9
Milking Frequency Times per day 2
The reason for differences from earlier studies in culling might be due to the level of study as the
present study was conducted on medium size farms where commercial trends were evident,
hence; better care of calves leading to long productive life of buffaloes was observed.
Feeding
Buffaloes all over the subcontinent are kept under poor feeding conditions. They are fed
roughages and occasionally concentrate (Table 2).

Table 2 Buffalo feeding observation

Parameters Units Observation
Feeding on grazing at Hectares No pastures
pastures
Concentrate feeding Kgs per day 3.3
Milk from concentrate Kg ECM per Kg Of 2.2
concentrate

Fodder mixed with wheat straw was offered and as concentrate source, cotton seed cake was
commonly used. Similarly in India, grasses with paddy straw were found commonly used for fill
effect and rice broken, gram kernel and rice bran were commonly being used as concentrate
(Saha et al. 2004). Bangladesh farms showed similar trends to India as paddy and its byproducts
were commonly available for feeding (Hemme et al. 2004)

Capital Investment Analysis

Figure 4: Capital Cost
The investment in different segments was Machinery Livestock Building Others
different. However, a general situation observed 828
is given as under, to harmonize results, costs
have been calculated in terms of € per cow
(Figure 4). Livestock investment was primary
244
and major cost, observed. Whereas, building
122 87
costs were very low, essentially translating into
the fact that poor housing management and open
yards were used for livestock keeping. Similarly,
no significant investment on milking machines Euros/Cow

and other equipment was done. Figure 5: Capital Investment Share

Contrary to the situation, Capital input reached Machinery Livestock Building Others
to 5,291€ per cow in European farms (Wille et
al. 2009). Differences were due to the
mechanization and improved farming in 9%
European farms versus traditionally maintained 19%
low investment farms in Punjab, Pakistan. A
7%

4
65%
percentage of capital utilization is shown in Figure 5.

Operating Expense Analysis

Costs at dairy farms may be divided into 2 distinct groups, direct costs (involving expenses
directly on dairy animals) and indirect costs (labor, machinery, building, depreciation and
miscellaneous costs).

Table 3 Dairy farms Expenditure

Type of Costs € per100kg ECM

Purchase of animals 3.455
Animal health, hoof trimming 0.422
Insemination, ET 0.117
Other direct costs of animal production 2.524
Seeds 0.985
Fertilizer 3.684
Pesticides 0.732
Other direct costs of fodder production 0.330
Total direct costs 12.249
Personnel expenses 5.434
Calculated cost for family labour 0.001
Contract work, leasing of machinery 1.485
Fuel, lubricants 0.922
Energy 0.127
Depreciation of machinery and vehicles 0.250
Opportunity costs for machinery and vehicles 0.191
Total labor related costs 8.410
Depreciation of buildings and installations 0.176
Opportunity costs for buildings and installations 0.143
Total costs for buildings 0.319
Renting land 0.196
Opportunity costs for land 2.893
Taxes and fees related to land -
Total costs for land 3.089
Other costs 0.066
Total of costs 24.134
Amongst all aforementioned costs, cash costs Total costs in European farms remained 41.5
remained at the highest followed by the € per100 kg ECM (Wille et al. 2009) and was
opportunity cost and the depreciation cost higher in all cost components due to advanced
respectively. Reasons of low in depreciation farming systems.
cost are the lesser capital input in terms of
machinery and buildings (Figure 6). Entrepreneurial Returns
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 Cash Opportunity Depreciation
Figure 6: Operating Cost Share (%) 2%

Milk remains the major income source of

farms with average farm income of 44.6 € 20%
per 100Kg ECM. Other inflow calculated included the animal returns, income from renting
assets to nearby farms and others. The milk
returns were capped at 37.91 € per 100 kg Figure 7: Returns Structure (%)
ECM (Figure 7). Milk Animal Sales Renting Assets Others
78%
Consequently, in 2008-09 some 20.47 €
per100 Kg ECM was being earned by most 2%
4% 9%
dairy buffalo farmers in Pakistan.

Current Situation, Challenges

& Future Options

The Milk price has been declining for the

last 4 years in Pakistan (Figure 8). Year
2011-12 was relatively better in terms of 85%
price offering with average of around 0.36
€/Liter. The major reasons were cheaper
production of SMP and its import from
neighboring countries like India.
Figure 8: Milk Price Trend
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
-

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2010-
11 2011-12 2012-13 2013-14

Input costs ranging from direct, indirect and opportunity have gone higher. Animal feeds
(generally covering 70% of operating expense) take corn as a major ingredient and its price is
a general indicator of overall feed costs. The corn prices have gone as much as double over
the year 2009-2013 (Figure 9).
30000 20000
25000 15000

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 10000
5000 Figure 9: Corn Prices (2009-2013)
0 250
200
150
100
50
0
1 2 3 4 5
Euro/MT PKR/MT

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Above situation is alarming as no significant improvement has been observed in milk
production potential and farming trends but the prices have doubled in the meantime with a
noticeable decrease in milk price. Presently, the farming community is operating at minimal
profit margin and may fall prey to the negative margins.

A good factor is that capital investment and non-operational costs in Pakistan are relatively
low, compared to contemporary industries of other regions. On the other hand lower
production per animal is the most serious concern and needs to be addressed by better
utilization of feed resources and adoption of improved husbandry practices