We all know how dairy products hold an important place in most Indian households. From a health to religious perspective, dairy products have always been deemed a valuable commodity. A dairy farm business has a huge potential in India as we are blessed with the highest milk production and consumption worldwide. 

According to The Hindu, India’s dairy sector has seen a substantial rise of 6.4% annually in the last four years, beating the global average of 1.7%. That’s why dairy production made up about 4.2% of India’s GDP in 2020. So if you are looking forward to starting a dairy farm business, the right investment strategy is the foundation. 

From availing of a dairy loan to a successful MSME registration, we’ve got you covered with a complete guide on setting up a dairy farm in India. Whether you have already started dairy farming or wants to learn how to start a dairy farm in India, you will know everythingin detail.

Let’s get started:

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What is A Dairy Farming?

Dairy farming is type of agriculture practice that involves production of milk, which is processed (either on the farm or at a dairy plant, either of which may be called a dairy) for eventual sale of a dairy product.

A step-by-step guide to starting a dairy farm in India

A robust business plan

Like any potential start-up, you must formulate a business plan for a dairy farm. Good dairy business planning can be done by identifying current market trends, target areas, dairy loan requirements, etc.

The eventual goal is to serve customers, conduct thorough research by understanding the geography, average income, culture, household types, etc. Also, keep in mind the following factors:

  1. The type of dairy animals such as cows, buffaloes, etc.
  2. Number of animals
  3. A blueprint regarding facilities like breeding, milking, housing, cleaning, etc.

Choose location

Based on the physical plan formulated in the last step, you need to choose an ambient location that fulfills the requirements. Most probably, you would need a business loan to set up a new dairy farm. Hence cost-effectiveness becomes a major factor in deciding the location.

  1. Urban areas: If you plan to choose a location near cities, the market is assured, and transportation costs are minimal. In addition, high prices of dairy products in cities can generate high profits.
  1. Rural areas: It offers less labor and input costs and a vast area for breeding and fodder cultivation.
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Plan investment

Any new business needs the proper investment structure to become profitable. Yes, your investments will directly depend upon every facility and asset of your dairy farm. However, a wise investment can be the key to a thriving dairy business, starting from getting a dairy loan.

Several ways might help you arrange the necessary business loans and finances, such as:

  • Borrowing money 
  • Self-help communities
  • Subsidies by NABARD/Government

Luckily, various companies provide dairy loans to small businesses. You can avail of a dairy loan of the required amount in a short span of time, with a reasonable interest rate and time.

Legal compliance and registration

After getting your necessary finances like the dairy loan, it’s time to get your business/start-up registered legally. No business can run without a license. Hence, MSME registration becomes a mandatory step here. With fixed charges by the government, you need to obtain the following permits:

  1. Dairy farm license
  2. FSSAI license
  3. Shed license
  4. Company registration license
  5. Trade license
  6. Registration with ROC or Registrar of Firms

Any small business must stay updated with details and requirements for MSME loans to avoid last-minute hassles and discrepancies.

Purchasing assets

After arranging the finances and licenses, it’s time to utilize the dairy loan to purchase the required assets for your dairy farm. This step can be a deciding factor for your firm’s future success.

  1. Purchase of animals: Animals are the primary resource of your dairy farm as they are responsible for providing milk. Whether you choose a cow, buffalo, or any other animal, be mindful of the factors like its breed and the quality of milk produced by them. For example, exotic cow breeds like Jersey are known to produce more milk quantities than Indian breeds.
  1. Purchase of machinery: Important machinery and equipment are also a considerable part of the investment. Farm equipment includes milking machines, pasteurizers, homogenizers, storage tanks, etc. Other essential types of machinery include a tractor, fodder truck, washer, generator, feeder, motor and pumps, etc.
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Adequate infrastructure

Good and functional infrastructure can significantly improve the rate of production and profits of your dairy farm. You can easily invest a part of your diary loan in the following:

  1. Cattle shed
  2. Supporting structures like milking section, feed storage, housing room, manure pits, etc.
  3. Water facilities like tanks and bore-wells
  4. Good roadways
  5. Office

A dairy farm equipped with adequate facilities for both animals and employees can enhance production and quality, eventually generating huge profits.

Hire employees

No business can run efficiently without employees, especially a dairy farm that demands extensive labor. Therefore, a well-run dairy farm must have the following employees:

  1. Technically trained employees for areas like milking, healthcare, etc.
  2. Helpers and assistants might be trained or untrained
  3. Managerial staff for office 
  4. Veterinary personnel
  5. Transport men

Different fields require different skills; therefore, hiring employees accordingly can be time-consuming but proves beneficial in the long run.

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Branding and marketing

Finally, your well-established dairy farm needs to have a name and recognition to make its way in the market. Therefore, you must invest wisely in the marketing of your brand through various offline and online platforms. Potential marketing strategies include brand campaigns- the quality of milk, variety of products available, social media marketing, commercials, new ventures, and business proposals. 

All small businesses must utilize some part of their business loans or an MSME loan on marketing to give you huge returns in the future.  There is no doubt that an effective marketing strategy can boost your business in no time.

So, a dairy farm is undoubtedly a lucrative business in India. Once it gets established and well-recognized in the market, there’s no looking back because the dairy industry is full of endless opportunities. That’s why most renowned dairy cooperatives in our country are well-flourished both in India and abroad. 

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Staying updated and prepared throughout the process is one of the strategies for a successful dairy farm. From a well-planned business idea to a wise investment of your dairy loan, every step counts to build the next big dairy cooperative soon. 

We aid small upcoming businesses by providing financial loans. If you’re looking to open a dairy farm, consider learning about the dairy loan and get in touch with us today!

Frequently Asked Questions

What is dairy farming in short?

Dairy farming is a type of agriculture that is focused on producing milk. This is different from raising animals to produce meat. Milk can be used to produce dairy products, including cheese. Species commonly used are cows (so-called dairy cows), but goats, sheep and camels are also used.

How does dairy farming work?

Dairy farming can only operate because animals like cows give birth to young. When cows have calves, they begin to lactate. Dairy farmers extract milk from lactation for the purposes of creating milk, yogurt, cheese, and other dairy products for human consumption.

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

You can start dairy farming with 10-20 cows or buffaloes, you can increase animals numbers later.

How much money is needed to start a dairy farm?

20 lakh is the investment range to start the small scale dairy farm in rural or urban areas of India. The investment required to start a large scale dairy farming business can exceed up to Rs. 1 crore or even more.

Is a dairy farm a good business?

Dairy farming is definitely profitable and worth a go. The milk business can be profitable right from the start.

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