Indian Journal of Economics and Development

Dairy sector in Punjab has emerged as most crucial auxiliary for diversification of agriculture. The small and medium dairy farmers are an indispensable part of the milk production system as they contribute more than 75 per cent of the total milk production and marketed milk. The present study unravels the cost and returns of small and medium sized dairy farmers in Punjab. The study was undertaken in the three agro-climatic zones of Punjab. A multistage sampling technique was used to select the sample population. The results of the study revealed that the cost of per litre milk production incurred by small and medium sized dairy farmers was found to be 28.77 per litre and 26.76 per litre respectively in winter and 33.02 per litre and 31.37 per litre in summer. It was further observed that small sized dairy farmers were bearing losses in both the seasons while the medium sized dairy farmers were having profits indicating dairy farming not a profitable venture on small category dairy farms and to make it profitable one, the number of milch animals should be 6 or more. The study suggested that there is a need to sustain small and medium dairy farmers by providing them higher prices of milk and cheaper inputs to increase their profit margin. The government may follow a conductive integrate policy for the growth and expansion of dairy business in Punjab.