A study was designed at Social Sciences Research Institute, PARC, AARI,
Campus, Faisalabad, Pakistan during 2010 to compare the profitability of rural
versus peri-urban dairy production systems in district Sargodha. Total of 110
respondents were personally interviewed using structured and pre-tested
questionnaire. The results showed that total variable cost of rural dairy farms
was Rs. 55828 which was higher than that of peri-urban farms (Rs. 48252) for
all categories of milk animals. Per litre gross margins of peri-urban dairy farms
for high and average milk yielding animals were estimated at about Rs 9.5 and
Rs 8.3, respectively which were significantly higher than that of rural dairy
farms (Rs 7.0 and Rs 5.8). The difference in gross margins per litre across
groups was statistically significant at 5 percent level. The results of regression
estimates showed that total labour cost, fodder and forage cost, and
concentrate feeding cost have negative relationship with dairy farm profitability
and all these cost indicators were found significant at one percent probability
level. The coefficient for milk price shows significantly positive relationship
with farm profitability. The model is overall significant at one percent level. The
study concludes that cost effective management practices may improve the
dairy farms profitability. Inclusion of improved livestock breeds may also
enhance productivity and profitability of dairy farms.