Dairy Farm Business Plan

A dairy farm business can be a lucrative business option given its all-season nature. But, to make a dairy farm business into a profitable venture, one must have a detailed business plan. A well-thought-out dairy farm business plan essentially makes it easy to achieve short- and long-term business objectives. 

 

Moreover, business plans also help procure grants, subsidies, or even business loans. Now, let us take a look at one way to create a business plan for a dairy farm.

A dairy farm business plan should ideally consist of the following components:

• Introduction

The introduction of the business plan should accurately describe the nature of the business, its purpose, key challenges, elementary business details, and a financial summary (if it is an established entity). 

 

The financial summary section should house basic information pertaining to the establishment such as the net worth of the business, the consolidated gross revenue, net income from the farm, and cash flow patterns. It should also include ratios such as the current ratio, working capital ratio, and debt-to-equity ratio, among others. 

• Mission Statement

This part should include the aim of the business. In the case of a dairy farm business, it could look something like ‘To produce milk of the highest possible quality and provide it at an affordable price to the general populace’. 

• Farm’s History and Location

The plan should also include information concerning the proposed/existent location of the farm, including the area, city, and the state it is located in. The plan should also mention the size of the land and whether or not it belongs to the business owner itself or has been leased. In the case of the latter, the lease terms should be specified. 

• Cattle and Farm Machinery/Equipment

Information pertaining to the total number of cattle that will be grazed and the types of machinery and equipment which will be purchased must be a part of this section. 

• Business Strategies and Ideas

This section of the business plan should contain all of the details pertaining to the various strategies, proposals, and the ventures that will be added to the umbrella brand.

• Summary of the Implementation Plan

The summary of the plan should talk about future business plans concerning management practices and the estimated timeline for the delivery of the product.

The necessary components of a dairy farming business which must be arranged ahead of starting operations are as follows:

• Shed

The shed must be an area which has been properly covered for the sake of the cattle that will live there.

• Land

Farm owners should also make it a point to maintain cultivated areas or land for the purpose of growing the fodder for the cattle. It will basically depend on the number of animals which will share the roof. It is believed that an acre of land is generally sufficient for about 8-10 cows or bulls.

• Fodder and Water

Both these things should necessarily be in abundance as water facilitates the proper growth of green fodder and the fodder, in turn, facilitates the proper nourishment of the cattle.

• Cattle and Health Management

Selecting a good-quality cattle breed and planning proper health management for them is another important component that needs to be considered. 

 

The farm owner must carefully select the right breed that is known for high milk yield. Additionally, the caretaker should follow a strict schedule of vaccination to control diseases and protect the health of the cattle. Besides, the caretaker should consider regular veterinary care as a priority. 

Basically, there are a total of eight important tasks that the aspiring entrepreneur should undertake ahead of starting a dairy farm. 

 

They are:

• Consulting experts, market leaders, and professionals alike

• Conducting business research

• Planning out the area that will be home to the animals

• Creating a feeding and waste management program

• Obtaining relevant licences from concerned authorities

• Getting funds or business loans

• Finalising a name for the business

• Getting the business registered as a company or an MSME

 

To start a dairy farming business, entrepreneurs must start with fewer cattle at the initial stages. At later stages, the number of cattle can be increased, depending upon the demand.

 

The business owner will also need a registration certificate in the name of the company which can be obtained from the authorities. The same can be obtained by the entrepreneur if they register their firm as a partnership, sole proprietorship, public limited company, private limited company, or a limited liability partnership.

 

Next, business owners will also need to purchase the required equipment and learn to manage the various moving parts of a dairy farming business. These are:

• A storage room dedicated for food of the animals

• Irrigation and water distribution system(s)

• A milking store

• Barns and sheds to shelter the animals from harsh conditions

• A sterile facility for milk storage and pasteurisation purposes

• Equipment and machinery

 

On top of the above requirements, licences and other requisite permissions will also have to be obtained from the respective authorities. It must be noted that a special kind of licence which will allow the business owners to bring animals from one state to another will also be needed.

The National Bank for Agriculture and Rural Development (NABARD) has initiated a subsidy scheme as a part of the Dairy Entrepreneurship Development Scheme (DEDS). As a part of NABARD scheme, farmers will benefit from getting subsidies on dairy farming loans that have been secured from eligible and registered formal Indian lending institutions and NBFCs. 

 

The subsidy rate is about 25% of the total project outlay for the general category farmers, and 33.33% of the total project outlay for the SC/ST category farmers.