Start Your Dairy Business

Dairy has been a major part of the Indian agrarian economy for ages. The dairy industry still remains a lucrative one with rising demands throughout the year. Start your own dairy business & be a part of the ‘White revolution’ in India.

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Since India has a deep-rooted connection to agriculture and nature, it is a major agrarian economy, and has been one since Vedic times. The dairy industry is also a thriving agrarian based industry in India that helps feed millions of people. In fact, the dairy industry accounts for 4% of India’s GDP. Since milk and other dairy products have a market throughout the year, the dairy farm business is a lucrative one in India. Whether it is a hot cup of coffee in the morning, or a kheer for Sunday lunch, we Indians, consume a lot of dairy products. The dairy industry is also great for people who want to use modern technology, but yet remain close to nature. Therefore, in India, the dairy business acts as a tool that helps in socio-economic development. This is why the Government has come out with various schemes, loans and fiscal initiatives to help dairy farms in India.

Securing A Dairy Farm Loan:

Securing a dairy farm loan can help start and operate your farm, and even make changes as well. Additionally, securing a dairy farm loan can help in establishing additional units to produce, process, and distribute more dairy or milk products. It also helps in meeting expenses such as acquiring raw materials, storage, processing, packaging, as well as costs incurred in the growth and maintenance of farm animals.

Benefits for starting a dairy business:

Low initial investment in comparison to other industries

When compared to other industries, the dairy industry is less capital intensive. The primary cost is purchasing the cattle, but for this, you receive a lot of grants and subsidies from the government. Also, it does not require much investment in the form of buildings, as all you require is a shed to house the cattle.

Rising Demand

Dairy products are evergreen, in the sense that their demand does not dwindle. They are in demand throughout the year, and hence, you do not need to worry about lack of demand during certain timeframes and so on. Also, since milk is very nutritious, the demand for high-quality dairy products are on the rise in India.

Ease of Marketing Due to Milk Producers’ Societies

As the dairy industry is a traditional business, dairy farms do not require a lot of independent marketing. Furthermore, societies such as MPCS help dairy farms in India with their marketing, helping you cut costs, and attract new customers with ease.

Animal insurance

The government is very helpful towards the dairy industry, as it helps in socio-economic upliftment. Therefore, they have allowed dairy farm owners to insure their animals as a way to minimise their risk, and maximise their profit. Doing so helps farmers manage their risks, and prevent serious issues that can arise if a lot of their animals fall sick or die.

Alternate Uses

The animals in such dairy farms in India also serve multiple purposes. The dung produced by the cattle helps with biogas production, whereas their manure is essential for agriculture. It can also be used as feed for fish and vermicomposting. Therefore, they do much more than just produce milk, helping farmers monetise them in different ways to maximise their profit margins.

Eco-friendly and Clean

When done right, the dairy farm business in India is one that is environmental-friendly and clean. If farmers use only natural products, the industry is one that can support a lot of other agrarian-based industries.

Easy to Set-Up

Unlike other industries, the dairy industry is not very high-skill-labour intensive. Most of the labour required is manual in nature, meaning you don’t need a lot of highly skilled people to set up a dairy farm. Therefore, families can come together to set up their own small-scale dairy farms, making it a very accessible business option to Indians.

Eligibility Of A Dairy Farm Loan:

Also known as a working capital term loan, a dairy farm loan is eligible to be acquired by framers, or agro-workers, dairy co-operative societies, self-help groups, and others.

The loan amount granted to the above-mentioned applicants can range up to one lakh rupees when livestock is used as collateral. The loan amount granted to the above-mentioned applicants can exceed rupees one lakh when collateral used maybe land mortgage or agricultural credit or any other forms of security with a trusted third-party reference.

Dairy farm loans that range up to one lakh rupees have zero profit margin is nil, but for than rupees one lakh the profit margin ranges from 15% to 25%. However, the interest rate of a dairy farm loan depends on the lender, with a repayment period of five to six years, and in some instances a grace period of two to three months.

Creating A Dairy Farming Business Plan:

Creating a dairy farming business plan helps in attracting investors and raising funds. Running a dairy farm involves more costs than running poultry farms or any other farm. Creating a dairy farming business plan helps plan in advance for the costs involved. The following information will help you with how to start a dairy farm in India.

  • The Cost to Start a Dairy Farm: When it comes to how to start a dairy farm in India, it involves a large one-time expenditure to get started. Hence, buying an existing dairy farm is better than building one on your own.
  • Animals Good For The Farm: Raising farm animals that can thrive in the farm’s environment, as well as produce dairy products that have a high demand for among customers. Some of the most common dairy farm animals are goats, cows, water buffalo, and should be considered when creating a dairy farming business plan.
  • Testing Your Animals: When figuring out how to start a dairy farm in India, it is important to be ready for how to test your animals before buying them as well. Healthy animals would give healthy produce and ensure the safety of the products. It is also important to vaccinate these animals on a regular basis, to keep them healthy.
  • Advice From Other Dairy Farmers: By seeking advice from other farmers, it will give you insight into how to manage your farm, take care of your animals, and also how to sell your dairy products to local store owners and other dairy distributors/sellers.
  • Land Required To Support Cattle: In order to raise cattle, farmers need to figure out the land required for grazing, and also the cost. In some cases, farmers have been known to rent land for this purpose.
  • Research Farming Practices: From breeding to calving, weaning or crop management, there are several farming practices that can help you with managing your farm.
  • Government Permits: Contact the local or regional government to secure the permits required to open and operate your farm. So remember to consider this step when planning on how to start a dairy farm in India.
  • Forecasting Expenses With A Dairy Farming Business Plan: By keeping the above points in mind, you can draw up estimates into your business plan. This can help you forecast expenses, and secure financial support in accordance.

Figuring Out How Much Does It Cost To Start A Dairy Farm?

When figuring out how much it costs to start a dairy farm, it is important to get your estimates right, and analysis of future expenditure. With accurate estimates you will be able to build a dairy business that generates a profit, that will allow you to expand and grow your farm.

When doing an analysis of future expenditure, the key factors to consider are the 4 P’s of marketing with regard to your dairy business- product, price, place and promotion. As a matter of fact, it is important to review the 4P’s on a yearly basis to figure out the cost to start a dairy farm.

Another part of setting up a small dairy farm design and maximizing profit. is for you as a farm owner to have a proper understanding of your competition. Naturally, the largest cost involves medication and vaccination of animals and should be the most important consideration for calculating the cost to start a dairy farm. Hence, for this reason, several standard dairy farms prefer hiring in-house veterinary doctors to protect their animals. This practice is followed in several countries like the United States of America, Canada, the United Kingdom and Australia.

Other factors that contribute to cost include cost of labour, cost of cattle feed, cost of cattle medication, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, promotion and branding cost, rent/leasing amongst other factors.

Finally, prepare yourself to start small and aim high. Rather than purchasing a farm, you can either rent or lease a property for your farming activities. Wish you all the best with your dairy farming business plan.

How to Start a Dairy Business: Things To Consider

  • Like with any other business, you need to study the market in your region before you decide to start your own dairy farm business. Look at your geography, analyse the incomes, family types, number of children and dairy requirements of your locality to get a good picture of the market size available to you.
  • Choose between a cow dairy farm business and a buffalo business depending on the milk requirements of the locality in which you want to start the business. While buffalo milk is fattier than cow milk, the latter can be more healthy. Therefore, if your area has a lot of higher-income families who have more money to spend, they will prefer premium low-fat cow milk that is healthy.
  • After you have chosen the type of dairy farm business you want to get into, the next most important thing is choosing the right breed of cattle. You have to choose between Indian and Western breeds, depending on your milk requirements, capital available and your cost of production and sale. You should also milk the cattle thrice before buying it to see exactly how much milk it is capable of producing. Buffaloes, on average, produce 12 litres, whereas cows can give 16-17 litres. Also, always remember to buy cattle at an interval of 2 months to have a regular supply of milk.
  • Once you have the cattle, ensure that you give it clean water, and nutritious food. Use fresh green fodder, and minimise artificial produce as much as you can to ensure the milk is pure and fresh.
  • Before you buy the cattle, you need to make sure you have a large enough shed to house all of them. Rather than cramming them into a stuffy space, try to get a shed that is large enough and spacious enough for them to move around. The building should be well-ventilated, clean, on high ground and away from main roads.
  • After you buy the cattle, you need to be very careful regarding their health. Contact a veterinary doctor as soon as possible, and give the cattle regular check-ups to maintain good health. Get all of them vaccinated on time, and keep them fit by letting them walk and graze freely.
  • Since the dairy industry is competitive, you need to think of a marketing strategy for your dairy farm business. Look for ways that will help introduce you to your locality, and get them to trust you and your products. Market a unique selling point or competitive advantage that you have to reach out to the masses.

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