**2.1 Smallholder subsistence production system**

Smallholders produce milk to meet family requirements at minimal cost and have limited access to substantial milk market. The average subsistence unit consists of about three buffaloes, with at least two in milking. Average milk yields per animal are 3 L/day. The main inputs into these households' dairy production are often noncash resources, such as family-owned land and labor. Some 70% of smallholder milk producers fall into this category [3]. Most of the milk produced is utilized as fluid for fulfilling the family needs, and the rest is converted into butter and ghee. This system implies the use of household labor and therefore high labor-intensive occupation. Almost 50–60% of the feed requirements of these animals are fulfilled from grazing along with wheat straw and some green fodder. No purchased concentrates are offered. The proportional contribution of this system is declining and is replaced by smallholder market-oriented production system.
