Informal Dairying

 What is the economic situation of informal dairying in India?

The best yield from indigenous livestock is that from murrah buffaloes which on an average give 10 litres per day for about 300 days. So let us do some back of the envelope calculations to see what is the maximum income possible for a smallholder farmer from dairying with these buffaloes.
Murrah buffaloes that are in lactation on an average cost about Rs 1 lakh. The smart way to do dairying is to buy a buffalo in lactation and sell it off along with its calf when it stops giving milk for about Rs 40000. This, the net investment for two buffaloes would be Rs 120000. The cost of a simple shed cum biogas plant along with other accessories would be about Rs 60000 which can be depreciated over ten years. Thus, the yearly Capex is Rs 126000.
The yearly Opex is Rs 100000 for feed, medicines, electricity, water, delivery to retail points etc. Add another Rs 4000 for contingencies. Moreover, the interest cost of the capital investment would be another 10,000. So the total annual expenditure is Rs 240000.
The annual revenue from selling 6000 litres of milk at Rs 50 per litre is Rs 3 lakhs. Add another Rs 30000 for the manure and gas from the biogas plant and the total annual income comes to Rs 330000. Thus, the net annual income from rearing two Murrah buffaloes is Rs 90000.
Now the farmer and his wife have to put in twelve hours of work daily in tending to the buffaloes and the biogas plant, milking and then delivering the milk. Therefore, the total number of eight hour work days is 300 x 1.5 = 450. So, the daily wages from informal dairying can at best be Rs 200. In reality it is much less as milk production is not at this level all the time and there are many other slippages.