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written by Khatabook | October 17, 2021

How To Start A Dairy Business In India

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In India, milk is a basic necessity of every household. For most people, the mornings are incomplete without a cup of tea or coffee or a glass of milk. Indians love consuming disease and sweets made from milk all year round. There is a high demand for milk and milk products throughout the year. But in festival seasons, the demand for milk is even higher than on regular days. The milk dairy business in India contributes to about 4% of the country's GDP. The use of milk in making sweets, ice-creams, butter, curd, ghee and cheese and many more products is the reason for its ever-growing demand. The dairy farm business in India is, therefore, a profitable business idea.

How to start a milk dairy business in India?

You have to take various steps and consider several plans before starting a dairy farm for the milk business in India. 

How to start a dairy farm business in India:

1. Framing a good dairy business plan

This business plan should give you an idea about how to start with the milk business in India. 

Your business plan should cover the following points:

a. The objective and nature of the business, whether you want to sell only milk or other milk products such as curd, ghee, etc. You should know the objective of your business, the desired profit and the growth that you want to achieve.

b. Scope and scale of your business. Deciding the size and scope of your business can help you estimate the budget and money requirement of setting your dairy business.

c. Your business plan shall be framed after considering the requirements and challenges of owning a milk dairy business.

2. Research and market study

Before starting your dairy business, it is better to do some research about the market and other factors:

a. Observe the needs and preferences of the people living near the business location.

b. The geographical situations, availability of roads and transport in the local area.

c. The demand for milk and milk products in that area.

d. What kind of milk you will sell, cow milk or buffalo milk or both.

e. The number of cows and buffaloes that you will raise for the dairy business.

f. Whether people living around the dairy shop prefer milk with fat or fat-free milk.

3. Purchasing nutritious fodder and availability of water for animals

For the milk business, it is important to provide nutritious and adequate fodder to milk-producing animals. You should plan the following carefully:

a. Suppliers from whom good quality fodder is to be purchased for animals.

b. Supply and storage of safe drinking water for animals.

c. Quantity of fodder which is to be purchased and its storage.

Also Read: Top 10 Cities for doing business in India

4. Plan for the arrangement of land, shed and waste disposal of animals

It would help if you had a proper arrangement of land and shed for the animals. These are some important points that you should consider before starting a dairy business:

a. You should have adequate land depending on the number of cows and buffaloes to be owned for the business.

b. There should be an arrangement of a shed for the animals to keep them safe in all seasons.

c. If you are planning for a large scale business, you should also have land to cultivate crops and fodder for animals.

d. To maintain hygienic living conditions for the animals, a proper waste disposal system is also necessary.

5. Legal formalities, license and permissions

The legal formalities in India vary from state to state. Some of the compulsory permissions and formalities are:

a. Registration with the Food Safety and Standard Authority of India (FSSAI) is compulsory to start a dairy business. You also have to get the Bureau of Indian Standards (BIS) certification.

b. Registration in the local veterinary and dairy development department. 

c. License from the Municipal Corporation or local panchayat, based on the place of your milk business.

6. Loan and finance from the bank

You can get financial assistance for starting your dairy farm business in India from banks or NBFCs. The National Bank for Agriculture and Rural Development (NABARD), under the Dairy Entrepreneurship Development Scheme (DEDS), provides subsidies on loans taken by farmers for the dairy business. You can get a subsidy of 33.33% on the loan amount of up to INR 7 Lakhs for the dairy business. You can contact the nearest bank branch for getting more information about loans and the related formalities.

7. Marketing of the dairy business

For a profitable start of your milk dairy business, you need to have a good marketing plan. Your prospective customers should know about the type of milk and milk products you are going to sell. There is a high level of competition in this business. It would be best to promote your business online and offline to gain customers initially and plan to increase your customer base in the future gradually. 

Now that you know about the steps about how to start a dairy farm in India, let's learn about the cost.

How much does it cost to start a dairy farm in India?

For  starting a dairy business in India, you have to purchase cows or buffaloes, arrange land and shed for their shelter. Procuring fodder and water, transportation and storage facilities, employing labourers, vaccination and medical aids for animals and other utilities are also necessary costs. Therefore, the cost to start a dairy business in India depends on the number of animals to be reared and the size of your business. To start a business with 20 animals, you have to invest approximately Rs 10-20 Lakhs. Apart from the initial investment, you also h ave to incur recurring costs on insurance and medical facilities, dairy equipment, waste management, growing fodder and labour expenses.

Benefits of the dairy business in India

1. The demand for milk and milk products is high in all seasons. It is an all-time active market. Milk is a basic necessity in Indian households, and any other product cannot substitute the demand for milk. There is also a huge demand for milk in restaurants, sweet shops, tea shops, and small and big businesses.

2. The dairy farm business in India does not require employing skilled labour. Therefore, the labour expenses in this business are comparatively low.

3. The milk business involves eco-friendly practices and does not cause harm to the environment. You do not have to spend huge amounts for complying with the environmental laws and regulations.

4. The animal waste can be decomposed in the Biogas plants to produce natural gas and can also be used as an organic manure for growing crops and fodder for animals.

5. The demand for milk and milk products rises above the normal levels during the time of festivals in India. Therefore, you can make an extra profit when the market is at its peak.

6. Animals or livestock are the main factor of this business. You can get insurance for the animals to cover the medical expenses if the animals get infected.

Limitations of the dairy business in India:

1. The success and profitability of the milk business depend on the quality and breed of the cattle. Selecting the best breed of cows and buffaloes for your business and getting the desired milk production depends on several factors.

2. You also have to incur costs during the non-lactation period of animals, reducing your profit margin.

3. Insufficient and poor quality of fodder for the animals can result in lesser milk production and cause considerable losses in the milk business.

4. You have to be extra careful in maintaining a hygienic environment for the animals to protect them from diseases and infections.

How to select the best breed for your dairy business?

Before selecting the best breed of cows and buffaloes for the milk business, you should consider the following factors:

1. Survey about the type of milk and taste preferred by the people living in the shop's locality. 

2. The demand for the milk and milk products should also be estimated to select the breed according to the desired milk yield.

3. The popular breeds of buffalo are Jaffarabadi, Surti and Murrah. Buffalo milk is most suitable for tea. It is also good for making ghee and butter, as it is high in fat.

4. The demand for cow milk is also very high due to its nutritional properties. Cow milk is one of the best sources of protein and calcium. Also, it is low in fat as compared to buffalo milk. The different breeds of the cow for the milk business in India are Gir, Rathi, Sahiwal, Tharparkar and Red Sindhi.

Also Read: 10 Tips for Successful Money Management for A Profitable Business

Other essential points to consider at the time of starting dairy farm in India:

1. It is good to have your own land for growing animal fodder and setting up your dairy business or shop near this land. 

2. It is important to provide good quality fodder in adequate quantities to the cows and buffaloes. There are various fodders for dairy cattle, such as legume fodder, cereal fodder, grass fodder and tree fodder.

3. Proper storage for fodder conservation is necessary to store it with minimum loss of nutrients.

3. Adequate space for storing the dairy equipment and milk containers should be there.

4. A water tank with a storage capacity of 2000 litres of water is needed for a dairy farm with 20 animals. Also, there should be a borewell facility to ensure a timely and sufficient supply of water.

5. It is important to keep the cattle healthy and disease-free. Therefore proper medication and vaccination of the cows and buffaloes need to be taken care of from time to time.

6. You should deliver pure and good quality milk and milk products to the customers. In the dairy business, cleanliness and hygiene are of utmost importance.

7. The animals should be kept in an adequate open space. There should be an arrangement of sheds to protect them from cold weather and rain. In the summer season, buffaloes require a cooling facility. 

Conclusion:

Milk is one of the most consumed commodities in India. It is a daily requirement in every household. From a small tea shop to a big restaurant, bakery or sweet shop, milk and milk products are supplied regularly.  For its all-season demand, dairy business in India is a good option if you have the resources and knowledge about dairy farming. It is a highly competitive business, and you have to maintain the quality and regularity of milk supply to enhance your consumer base. In the initial years, the profit margin can be low due to the investment cost, but the profit margins can gradually increase. 

We hope we have provided valuable tips on how to start a dairy farm in India. Download the Khatabook app for more business-related tips.

FAQs

Q: Is there any subsidy scheme on dairy farm loans?

Ans:

Yes, the National Bank for Agriculture and Rural Development (NABARD) provides a subsidy of 33.33% on loans taken for dairy business by farmers for an amount of up to 7 lakh Rupees.

Q: Cow or buffalo, which animal requires to incur more feeding cost?

Ans:

The feeding cost of buffaloes is less than the cow because the buffaloes can also be kept on coarse crop residues.

Q: How many cows and buffaloes are needed to start a dairy business in India?

Ans:

At least 10 to 20 cows and buffaloes are required to start a dairy business in India.

Q: Do we need skilled labour for dairy farming?

Ans:

No, the dairy farm business does not require skilled labour. It can be done with the help of unskilled and semi-skilled labourers.

Q: How much does it cost to start a dairy farm business in India?

Ans:

It costs approximately 10 to 20 lakhs to start a dairy farm business in India.

Q: Which are the most common breeds of cow used in the dairy business in India?

Ans:

The common breeds of cows in the dairy business in India for milk production are Tharparkar, Sahiwal, Gir and Red Sindhi.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.