Dairy Farm Feasibility

Disclaimer
The purpose and scope of this document is to provide a guideline for the establishment of a 100-milking animal
dairy farm. The material included in this document is based on information and data gathered from various
sources and certain assumptions. While due care and diligence has been applied in compiling this document, the
information contained may vary due to any changes in any of the concerned factors like from person to person,
system to system, area to area, and actual results may differ from the presented information.

General

This Feasibility is for the establishment of 100 Animals Dairy Farm in which no. of milking animals will be
remained constant throughout the period. Financial plan of feasibility is based on 10 years.

Summary

Initial cost of the project Rs. 57.80 M

Initial working capital Rs. 5.0 M
2nd Year Capital Cost (purchase of 26 milking animals) Rs. 7.80 M
Total Project Cost Rs. 70.6 M

Projected Gross Revenues (Milk Sales, Animal Culling & Calf Sales)

Year 1 Rs. 31.60 M

Year 2 Rs. 34.96 M
Year 3 Rs. 45.52 M
Year 4 Rs. 45.26 M
Year 5 Rs. 42.89 M
Year 6 Rs. 41.86 M
Year 7 Rs. 41.76 M
Year 8 Rs. 41.49 M
Year 9 Rs. 41.58 M
Year 10 Rs. 41.67 M

Projected Net Profit Before Taxes

Year 1 Rs. 8.54 M

Year 2 Rs. 8.06 M
Year 3 Rs. 17.70 M
Year 4 Rs. 17.95 M
Year 5 Rs. 15.92 M
Year 6 Rs. 14.98 M
Year 7 Rs. 14.89 M
Year 8 Rs. 14.64 M
Year 9 Rs. 14.72 M
Year 10 Rs. 14.81 M
Payback Period 5-6 Years

Herd Composition

No. of Milking Animals on farm will remained constant i.e. 100. In herd considerations, animals are taken as units and
working is based on these units. Assumptions regarding animal units are as follows:
Animals Unit – Calculations No.
Adult Animal (lactating & dry pregnant) 1.0
Pregnant Heifer 0.75
Heifer Un-joined 0.50
Calf < 1 Year 0.25

Herd composition for ten years is given below:

Particulars Unit Year

Ratio 1 2 3 4 5 6 7 8 9 10
Milking Animals 100% 100 100 100 100 100 100 100 100 100 100
Dry Animals 100% 19 21 20 18 18 18 18 18 18
Pregnant Heifer 75% - 21 24 22 21 21 21 21 21 21
Heifers 50% - 32 36 34 32 31 31 31 31 31
Female Calf (up to 25% 54 62 57 54 53 53 53 53 53 53
1 Year)
Total Animal Heads 154 234 238 230 224 223 223 223 223 223
Equivalent Animal Units 114 167 172 167 163 163 163 163 163 163

Some assumptions about the herd are as follows:

Birth & Mortality Rate %

Birth Female (Sex Semen Usage) 70
Birth Male 30
Mortality new born 5
Mortality Heifer > 1 Year 3
Mortality adults (Milking & Dry) 2

Sales Price - Culled Animals Rs.

Dead Animal Carcass 500
Culled Animal - Heifer > 1 Year 50,000
Culled Animal - Adult Cow / Milking Cow 85,000

Sale Price - Normal Animals Rs.

Male Calf 15,000
Milking Cow 200,000

Particulars Related to Milk Production Year 1 Year 2 Year 3 Year 4 Year 5

Cow Lactation (Litres) 6,000 6,700 7,300 7,300 7,300
Inter-calving Period (Days) 395 395 395 395 395

Capital Cost / Initial Investment Break-up

Investment in Qty Unit Cost (Rs) Total Cost (Rs)

Purchase of Animals – 1st year 100 300,000 30,000,000
Purchase of animals for herd upgradation - 2nd Year 26 300,000 7,800,000
Land for Farm Construction 3 Acres 1,500,000 4,500,000
Construction of Milking Animals Shed 1 4,212,000 4,212,000
Construction of other Animals Shed 1 1,410,000 1,410,000
Other Farm Constructions & Installations 1 6,015,027 6,015,027
Dairy Equipment & Machinery 1 5,430,000 5,430,000
Agricultural Equipment & Machinery 1 3,250,000 3,250,000
Dairy Farm Office & Staff Residences 1 1,800,000 1,800,000
Staff Vehicles 1 1,140,000 1,140,000
Initial Working Capital 5,000,000
 Total (Rs) 7,055,7027

Detail of Construction and Installations:

 Construction of Milking Animals Shed includes 120 x 84 = 10080 Sq. feet covered area for 100 animals with
free stalls, shed cooling, sprinklers etc.
 Construction of other Animals Shed is for dry animals, heifers and calves.
 Other Farm Constructions and Installations include:

Components Qty Total Cost (Rs M)

Milking Parlour Area Construction - 6.02
Generator – 40KVA 1
Weighing Scale for Vehicles 1
Weighing scale of animals 1
Silage Bunker 3
Calf Cages 25
Water turbine 2
Water storage tank 2
Boundary Walls -
Store Rooms (Feed, Implements & Diesel, Pesticides & Fertilizers) 3
Electric Work -
Cattle Crush 1

Detail of Dairy Equipment & Machinery:

Qty Total Cost (Rs M)

Tractor + Trolley (for feeding & manure remover) 1 5.43
Milking Line 1
Milk Cooling Tank - 2.2 Tons 1
LN Containers 1
Veterinary Kit 1
Miscellaneous (Farm small equipment & tools) 1

Detail of Agricultural Equipment & Machinery:

Equipment & Machinery Qty Total Cost (Rs M)

Tractor + Trolley 1 3.25
Disk Plough 1
Rotavator 1
Laser Leveller 1
Maize Harvester - Single row 1
Agriculture Loader (front end loader) 1
Tube well (10 HP motor) 1
Miscellaneous Agri-Assets 1

Detail of Dairy Farm Office & Staff Residences:

Description Qty Total Cost (Rs M)

Farm Staff Residence / Office 1 1.80
Furniture & Fixture (incl. Computers, Printers, etc) 1
Bathrooms for Labour 2
Kitchen (with small equipment) 1
Miscellaneous 1
 Detail of Staff Vehicles:

Vehicles Qty Total Cost (Rs M)

Vehicle for Farm Manager - Suzuki Cultus 1 1.14

Motorcycles for Supervisors 2 0.1

Human Resource
Type Number Monthly Salary/ Total Monthly Salary
Person (Rs) (Rs)
Farm Manager - Dairy & 1 75,000 75,000
Agri Operations
Supervisor 1 45,000 45,000
Farm Accountant & Admin 1 45,000 45,000
Asst. Accountant & Admin 1 20,000 20,000
Labour for Animal Feeding 5 9,000 45,000
& Milking
Labour for Agriculture 4 9,000 36,000
Tractor Drivers / Helpers 2 12,000 24,000
Watchman & Office Boy 2 10,500 21,000
Total 17 311,000

Projected Running Cost

Feeding Cost:
Health & Breeding Cost:

Fixed and General Costs:

Total Cost:
Projected Farm Income

Projected Profit & Loss

Particulars

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10
Total Running Cost (Rs)

23,058,216

26,897,149

27,829,548

27,311,654

26,970,949

26,880,530

26,864,181

26,857,514

26,858,202

26,859,385

Total Annual Farm Revenues (Rs)

31,597,499

34,959,852

45,525,350

45,261,685

42,888,235

41,863,047

41,756,285

41,494,948

41,581,740

41,671,468

Farm Net Income

8,539,283

8,062,703

17,695,802

17,950,031

15,917,286

14,982,517

14,892,104

14,637,434

14,723,538
 14,812,083

Critical Success Factors

Profitable Dairy Business moves around the management. Dairying gives huge profit if it is well managed while
mismanagement leads to huge loss as well. So, the implementation of the project should be under the supervision
of a professionally skilled person. A competent farm manager or consultant is never expensive. A skilled professional
should be hired for establishing and running a profitable dairy farm. Along with others, following factors play a key
role:

Nutritional Management:
Feeding cost is the major share of farm expenditures which influences the milk production as well as the
farm profitability. Nutritional requirements of animals are fulfilled by fodder , concentrates (wanda) and
some supplements like mineral mixtures. For excellent nutrition management of farm, fodder should be
preserved in the form of silage. It not only brings down the feeding cost but also ensures the availability of
fodder throughout the year, hence lowers the overall production cost. For 100 animals, almost 37 acres of
land is required for fodder production.

Animal Comfort:
Milk production is directly related to cow comfort which is dependent upon various factors mainly the shed
designs, cooling system, bedding, floors, yards structure etc. Well ventilated sheds with floors and drains to
be hygienic are very important. The covered and open areas should be according to the standards. Cooling
system is the most important factor in this regard as high temperature leads to the heat stress to the
milking animals and results in less production. The cooling system lowers down the temperature which
increases feed intake, cow comfort and as result there is the increase in milk production.

Free Access to Water:

Fresh and clean drinking water should be available to animals for 24 hours.

Animal Breeding:
The future of the farm depends upon the animal breeding. Breeding practices should be well managed so as
to follow the principle "calf every year".