Dairy farming is a type of agri-business that involves the production of milk from domestic animals. The diary farms’ main purpose is to raise milk production in the country. The produced milk is then sold to regional daily companies, where the milk is pasteurized and processed. 

In India, dairy farming alone contributes to 4% of GDP. You can easily start a dairy business with your investment or by taking a dairy loan. Here are a few things to keep in mind before you start a dairy business.

Market Trends

Just like any other business, studying market trends should be your priority before starting a dairy business. This will help you analyze if you want to start a cow dairy or a buffalo dairy farm based on daily consumption.

In areas where families tend to boil the milk to extract ghee, the buffalo milk, which has high-fat content, will be in demand. Whereas nuclear families purchase every dairy product from the market without making anything at home, low-fat milk is preferred.

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Selecting the Breed

You have to be careful in knowing the preferred taste and market practices of the area you choose to set up your dairy business before choosing the breed.

Indian cows produce milk with A2 beta-casein, which is considered the best alternative for mother’s milk. However, Indian cows produce milk in fewer quantities compared to western breeds.

The quality of the breed is another vital point to remember. A buffalo produces 12 liters, and for a cow, it is 16-17 liters. Purchase the animals with an interval of 2 months for continuous milk supply. This will also help you to have reasonable EMI costs on your dairy loan.

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On average, fresh and clean water in a minimum quantity of five liters must produce one liter of fresh milk. For animals producing milk, water is required in large quantities. Providing clean water is crucial for the better production of milk by cattle.

The food consumption of cattle mostly consists of green fodder. These greens are usually brought during the seasons of Raksha Bandhan to Baisakhi, as these months produce the greenest fodder.

By feeding green fodder to the cattle, more milk production can be seen. In addition, it will help the owner save costs and clear their business loans.

Cattle Homes

The cattle sheds should have proper ventilation with non-slippery floors. It should be located with a minimum of 900 sq. mt away from the roads. Not following these regulations will harm the health of cattle.

Keep the cattle vaccinated and have an eternity doctor on standby for any emergencies. Please do not keep them tied throughout the day; letting them loose will provide them with enough exercise to stay fit.


Even though establishing a dairy business is simple, with the government providing many MSME loans, it is extremely difficult to stay ahead in the industry and make profits because of heavy competition. Devise unique strategies to advertise your business. Create monthly or early plans for customers with reasonable discounts so that people will start purchasing your products.

Creating a Diary Project Report

Usually, it is suggested to open small-scale dairy units for the farmers. This will even help the farmers to produce additional income in case of any disaster to their crops. Banks and other financial organizations provide dairy loans, ‌ business loans, and MSME loans to assist the farmers.

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To establish a small dairy business, you can take a dairy loan from any agency. The amount you borrowed as a business loan makes you money in such amounts to repay the bank with interest.

Let us take an example of setting a dairy farm with 20 cows. To calculate the capital investment, you should consider

  • Cost of 20 cows that could cost around Rs. 30,000 each. This will make it a total of Rs. 6,00,000 for 20 cows.
  • The cost of a cattle shed, a mud tile roof, a non-slippery floor, and a brick wall covering around 70 sq.m with an open area of 140 sq.m are Rs. 4,80,000.
  • Cost of pieces of equipment like milk cans, pails, buckets, chains, balance, etc. Rs. 40,000 
  •  Miscellaneous Rs. 10,000 

Total capital investment for the dairy farm would be Rs. 11, 30,000.

Space Requirements Report

The floor space per animal is measured in m2 and varies from animal to animal based on their type. We have to consider both the covered area that the animal stays in along the open area for the cattle.

Animal type   Covered area Open area
Young calves (< 8 weeks)         1.02.0
Older calves (> 8 wks)               2.04.0
Heifers            2.04-5
Adult cows     3.57.0
Adult buffaloes48.0
Cows approaching calving       1220.5
Bulls                12120.0
Bullocks          3.57.0

The whole measurements are measured in m2.

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Next, the feeding manager lengths along with the water trough lengths for each animal should be reported. This report will help you make accurate measurements in finding a location and taking a diary loan with the required amounts.

The following are the approximate measurements for each type of cattle and are measured in centimeters.

Type of animal             Feeding manger length per animal            Water trough length per animal 
Young calves (< 8 weeks)           40-50   10-15 
Older calves (> 8 wks)          40-50   10-15 
Heifers            45-60   0-45
Adult cows     60-75              45-60
Adult buffaloes60-75              60-75              
Calving females           60-75              60-75              
Bulls                60-75              60-75              
Bullocks          60-75              60-75              

The wet: dry cow ratio in producing milk is about 80:20. The report should consist of operational expenses with all the costs associated with feeding the cattle, raw material, insurance costs, medical costs, and labor charges. 

Following this should be the calculations of annual profit and diary loan/business loan/ MSME loan or any other loan repayment details.

Now that you know the basic steps to start a dairy business and create a dairy farm project report, you are all set to start a dairy business.

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Frequently Asked Questions

How can I start a dairy farm?

To start a dairy farm you can avail of a business loan from Govt. or NBFC.

Is dairy farm profitable?

Dairy farming is definitely profitable and worth a go.

How much does it cost to open a dairy farm of 20 cows in India?

You need at least 4,00,000 to 5,00,000 to open a decent dairy farm in India.

How many cows do you need to start a dairy farm?

At least 20 animals like ten cows and ten buffaloes will be enough to start a decent dairy farm.

How can I get a loan for a dairy farm?

The list of documents you will need to apply for a dairy farm loan is:

1) Proof of identity such as PAN Card, Aadhaar Card, voter id, driving license, etc.
2) Proof of address such as utility bills, ration card, Aadhaar Card, etc.
3) Salary slips for the last 6 months.
4) Passport size photographs.
5) Proof of registration of dairy business.

What is the NABARD scheme?

The NABARD scheme aims to provide funds for India’s rural infrastructure to enable long-term irrigation practices.

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