Dairy Farming –Business Opportunity for Farmers

CA Sanjay Joshi, ACCA (UK), DISA, DIRM

We are already 122 Cr and will be 143 Cr and the demand for milk in India will be highest. As per data produced by National Dairy Development Board, the milk production in 2010-11 was 121.8 Mn Tn, i.e. 280 gms/per day per capital milk consumption, which has grown @ 5% per annum. If the growth continues @ 5% per annum, the production will be 145 Mn Ton approximately, against estimated milk consumption of 150 Mn Tons by 2015 (as per current five year plan (2012-2015)). Excess of supply over demand, clear signals a business opportunity.

Though share of Agriculture Income in India’s overall GDP is declining, overall as a sector, Agriculture has produced eye catching results even in times of draughts, floods, and tsunamis in country and financial crisis going on around the world. India does not tax agriculture, therefore, increasing profit margins are adding directly to the wealth of farmers and they have sizable income to deploy for business opportunities, one of them is Dairy Farming.

Critical success factors for Dairy Farming includes good quality animals, desired quality food for the animals, appropriate land, availability of excellent animal homes, veterinary and breeding centers in addition to milk storage and processing centers (chilling plants). One shall also examine technical and economic (commercial) feasibility of the project of Dairy Farming.

As per estimates given by National Bank for Agricultural and Rural Development, the cost of the project (Dairy Farming) for a 10 Buffalo Unit is approximately Rs. 5 Lacs, which includes capital cost of buying animals, creating suitable sheds / construction, putting in place required machineries / equipment etc. Out of this, 70-85% of the project cost can be secured as a funding available from banks as per the various schemes of Government of India through NABARD or otherwise.

In terms of revenue, milk selling and sale of gunny bags net of cost of feeding and caring animals will fetch, net Rs. 1.5 Lacs per annum for a group of 10 Buffaloes, i.e. Rs. 15000 per buffalo per year.

All in all Dairy farming appears an attractive business proposal, especially for farmers having a quality and size of land (space) that can be used a center for Dairy Farming.