Useful Tips

Dairy Farm Business Plan


If you are considering what kind of business to open in the agricultural sector, then consider our dairy farm business plan. This is a great option for beginners, which does not require large investments, but at the same time will bring stable profits in the context of constant growth in demand and product prices.

After the introduction of counter-sanctions against the EU countries, the import of a large number of agricultural products was banned in Russia. Cheese, milk and dairy products were banned, resulting in an acute shortage in Russia. The government, announcing the import substitution program, did not take serious steps to implement it, so a shortage is also observed in 2019. According to experts, even if the consumption of dairy raw materials drops, and the number of farms begins to grow, the country will be able to close the deficit no earlier than 2025. To close the shortage of raw materials, Russia imported more than 1 million tons of palm oil in 2018, increasing imports immediately by 20%.

The current situation should be used: today the country lacks millions of liters of milk, so its value is constantly growing. Processing plants cannot buy milk from the population, because it does not meet the standards, so they are looking for small farmers who comply with laws and requirements for product quality. To organize a mini-farm, multimillion-dollar investments and dozens of hired workers are not needed: many entrepreneurs organize the process as a family business, working together as a four-four.

Which plot is needed

To organize your own farm you will need land. On this earth should be located:

  • the barn itself
  • feed storage warehouse,
  • paddock,
  • storage rooms for inventory
  • living room.

The minimum piece needed to start is 1000 m2. Such a piece can be obtained without any problems in almost all villages in Russia. You will also need to consider where the fodder will be harvested. It is optimal that your site is located near pastures and meadows. In this case, the animals will be on their own grazing, and the procurement and transportation of feed will not hit the budget.

Attention: in order to get land, you need to contact either the district administration or the administration of a specific settlement. Choose sites that are remote from residential buildings so as not to provoke conflicts with local residents.

Total investments

Estimating the size of investments in a business is quite difficult, because a lot depends on your capabilities, the availability of land and farm buildings on them, the selected number of animals and their breed. In general, you can start a microbusiness with even 5 cows. With good care, they give up to 15 liters of milk per day, that is, 75 liters per day, or about 2 tons per month. For a full farm you will need about 50 cows, for large-scale production - 100 or more heads of cattle.

The size of investments directly depends on whether there is an outbuilding on the site. If you rent a former collective farm barn, then you will spend 100-200 thousand rubles on its repair and insulation. If you order a ready-made hangar for keeping 50 head of cattle, then it will cost 4 million rubles, and if you build it yourself, you can reduce costs to 2 million rubles.

In addition to the hangar itself and the buildings adjacent to it, you will need to connect to utilities (at least electricity). Here, too, the costs cannot be called in advance. If the site already has electricity, then the costs will be small. If you have to pull a few kilometers of cable, then this will cost a substantial amount. Separately, you need to calculate the laying of the water supply system and gas pipeline. It is often cheaper to take water from a well or well, and use solid fuel instead of gas for heating. Some entrepreneurs install bioreactors on farms in which methane is formed. The resulting gas is used for heating, improving the ecology of the region. In total, you need to lay from 100 to 600 thousand rubles for connecting to communications, creating a project, etc., but here everything is purely individual.

Equipment selection

After you pick up the land and decide on the construction of the hangars, you will need to think about purchasing equipment for a dairy farm. You will need to think over and equip the stall places, place floor protection, put drinking bowls, purchase brushes for combing cows, install partitions and fences. You also need to consider high-quality ventilation, blinds on the front doors, a cooler for raw materials and much more. Separately, you need to think about how the room will be heated, both the barn itself and the administrative rooms.

Practice shows that to equip a hangar with 50 goals, approximately 2 million rubles will be needed. And this is not counting the tractor with a trailer that will be needed for transporting feed, manure, grass mowing, sowing and other agricultural work. The best option for this would be the classic MTZ-80, which you can buy together with attachments for 600-800 thousand rubles (used). That is, the total cost of equipment will amount to 3 million rubles.

Cattle acquisition

When calculating the profitability of a dairy farm, you need to understand how much livestock you will work with. You can buy a dairy cow for about 50-70 thousand rubles, a young heifer for 10 thousand rubles. Decide on the breeds that you will acquire: it is often more profitable to overpay and buy a little dairy breed than the usual “mongrels”. In total, you will need about 3 million rubles to buy 50 cows, and 6 million to buy 100 cows. This is provided that you will take animals after 2-3 calving.

Attention: Wholesale purchase will allow you to get a good discount. You can buy animals at large farms that breed certain breeds.

If you take young animals with the aim of growing them, you can invest in the amount of 1-1.5 million rubles, but in this case you will need to spend money on food and delay profit making until the cows begin to bring milk. Natural cattle loss due to illness or accident is also possible. In total, you will need approximately 8–9 million rubles to start a full-fledged farm.

1. Brief Investment Memorandum

At present, organizing a business in the agricultural sector is a promising and profitable business. There are a number of prerequisites for this. Firstly, it is government support in the form of the possibility of issuing subsidies and soft loans. Secondly, this is an increase in domestic dairy consumption. Thirdly, it is an import substitution policy in the field of agriculture. As a result, the payback period of the project is 20 months, the breakeven point of the project is 2 months after the start of work.

To organize a dairy farm, it will be necessary to purchase 120 heads of cattle (hereinafter - cattle). It is also necessary to hire 16 employees. When starting a business, you will need a land plot, which must be acquired into ownership. The minimum plot area is 3,200 m2, hangar (barn) - 2,000 m2.

The monthly farm output is 60,000 liters of milk. It is necessary to purchase an adult cattle, which will give milk immediately. There is no pronounced seasonality in this business, as milk is consumed daily. However, in winter, the cost of milk is higher. Farm products are perishable. The wholesale price of milk is 32 rubles per 1 liter. Thus, the financial indicators of the project are as follows:

Amount of initial investment - 16 930 000 rubles

Average monthly profit - 900 000 rubles

Payback period - 20 months

Break even - 2 months

Return on sales - 130%.

2. Description of the business, product or service

Today, an increasing number of people want to consume fresh milk and dairy products. At the same time, it is desirable that these products be of domestic production. Also, many people like to buy products directly from farmers. All this testifies to the great prospects for the development of this business.

The main products of the dairy farm is raw milk. Also, as the business develops, you can open a dairy production workshop.

For the operation of the farm will require a land area of ​​3,000 m2. On the territory of the site should be located:

  • hangar / barn
  • summer paddock
  • warehouse for storage of inventory and equipment
  • feed base

Please note that the hangar should be located next to the pasture. In case of opening a farm in winter, one-time purchase of hay for livestock is necessary. Further, the farm itself can provide hay for animals. In addition to hay, animals need to provide special nutrients in the form of feed. Feed must be purchased once a year.

The next step is to build and prepare a hangar / barn for placing cattle. You can build a cowshed from different materials. The flooring can be either wood or concrete. From the equipment in the barn you will need:

  • Storage tank
  • Engineering Communication
  • Stall seats
  • Milking machine with milk line
  • Barriers and partitions
  • Additional equipment for feeding animals

In addition to technological equipment, hay and other tasks will require:

Also, for the successful functioning of the farm, you will need to choose one of the following milk production technologies:

  • loose
  • tethered with stall milking
  • tethered with milking in a special area

For this business plan, stall milking technology was used, as well as an automated milk collection system.

In addition to the purchase of equipment, the purchase of a land plot and the construction of a hangar, the farmer will need to obtain permission to commission the hangar from the fire inspection and permission from the veterinary service. You will also need to pass checks for compliance with the quality of the products and obtain the appropriate certificate.

To obtain high results according to the results of the audit, it is necessary to study the following regulatory framework:

  • GOSTs (e.g. 3625-84, 51451-99 and others)
  • Federal Law No. 8 “Technical Regulations for Milk and Dairy Products”
  • Federal Law No. 184 “On Technical Regulation”
  • Decisions of the Government of the Russian Federation

As a result of compliance with all requirements and producing high-quality products, your company will be able to successfully develop and bring constant profit.

3. Description of the market

For a dairy farm, the main success factors are both the quality of the products and the speed of their implementation, since this product is among the perishable ones.

The main consumers of raw milk include dairies, processing plants, retail outlets and federal chains. Sales to these customers account for the largest share in farm revenue. Also, your dairy products can be purchased by residents of neighboring houses and villages.

With the development of production, you can purchase an additional installation for the production of dairy products, as well as carry out product packaging on their own.

The most effective way to load production capacity is to conclude long-term contracts with enterprises. This will avoid downtime, as well as spoilage of products.

4. Sales and marketing

Given the long preparatory and short production cycle, an advertising campaign and ways to promote products to the market must be approved long before the opening.

This business is characterized by sales through offline channels. Consequently, most of the budget of the advertising campaign will need to be directed to this direction. Advertising can be placed in city newspapers, on television, as well as on advertising banners. To increase brand awareness, be sure to take part in industry exhibitions.

Online sources can be used to collect a database of potential consumers, as well as information about decision makers in client companies.

Also, be sure to collect information about the effectiveness of various promotion channels. This will help you identify the least profitable ways and adjust your campaign in the future.

5. Production plan

To open a dairy farm, you will need the following:

  • Register a legal entity - IP
  • Pick up land
  • Own land
  • Build a hangar / barn and conduct communications
  • Purchase equipment and machinery
  • Pick up staff
  • Carry out commissioning
  • Buy cattle
  • Start work and product sales

Stage / duration, weeks

Business Registration

Let's look at the easiest way to register an entrepreneur so as not to have problems with the law and tax authorities. It is most reasonable to register as a peasant farm. You (or another organizer) become the head of the economy, and the rest - its members. Registration with the tax authorities takes no more than five business days; total expenses are less than a thousand rubles. Since you will be trading in a self-made product, you should choose a taxation plan for the single social tax, which means paying tax no more than 6% of the total profit of the farm.

Where to sell products

A farm of 100 cows will produce 1,500 liters of milk daily. Accordingly, you cannot sell it on the market yourself. You will need to find large buyers who will take it in bulk: dairies, processing plants, cheese producers, etc.

Attention: working with wholesalers is beneficial because they immediately take large batches, which simplifies logistics and accounting. It is likely that a large cheese farm or dairy will buy all the raw materials from you.

Of course, you can work with small wholesale, selling milk to local retail chains or suppliers, but this complicates the process, although it brings more money per liter. In general, this moment needs to be carefully thought out and calculated. Keep in mind that small buyers will constantly interfere in receivables, demand will constantly vary, etc. Therefore, it is better to work with wholesalers.

Profitable part

When compiling a business plan for a dairy farm for 100 goals, you must always calculate how quickly your investment will pay off and what profit you can count on. One cow produces about 5 thousand liters of milk per year, 100 cows respectively 500 000 liters of milk. Note that this is an average. If animals are poorly fed and kept in poor conditions, then milk yield drops to 3 thousand liters, and if, on the contrary, care and introduce advanced technologies, then milk production can be increased to 10 thousand liters per year.

As of 2019, the purchase wholesale price of a liter of milk is 22 rubles. Accordingly, 500,000 * 22 = 11,000,000 rubles per year will be brought by your farm at a total cost of around 10-12 million. That is, for a year you will fully pay back the investments made, after which you will begin to receive stable profits. But here you need to understand that you will need money for food, for the services of a veterinarian, for other expenses, etc. In general, the farm fully pays for itself in 16-18 months, provided that you have established sales of milk in full. If you start your own dairy production workshop (cottage cheese, cheese, kefir, fermented baked milk), then the profit will immediately increase sharply, but the costs will be more.

General expenses

Next, let's look at how much the cost of maintaining a livestock of 100 animals will cost. To maintain this number, you will need approximately 7-8 people. These may be your family members or employees. Employees need to pay about 20-25 thousand rubles, as well as about 30% of the salary of various deductions, taxes and insurance. If you hire 5 people, then the cost of them will be 5 * 25 000+ (5 * 25000) * 0.3 = 125 000 + 37 500 = 162 500 rubles a month or almost 2 million rubles a year.

Next, consider how much money you need to spend on feed. On average, consumption of one head of cattle in prices in 2019 costs 20,000 rubles per year. This figure can be reduced if you independently harvest grass, agree with local farmers or combines, but we will take the average indicators. Total 100 * 20,000 = 2,000,000 per year will be needed for food. If we talk about veterinary services, then per year per head costs about 2 thousand rubles, that is, you need to add another 200 000 per year. Total total costs will amount to 4.2 million rubles per year. For land rent you will need to pay another 100 thousand rubles, for utility services - 200 thousand rubles, that is, annual expenses grow to 4.5 million. For any force majeure, repairs and maintenance, we will bring another 200 thousand rubles, and in the end we will get a figure of 4.7 million.

It turns out that the total cost will be 12 + 5 = 17 million rubles (subject to the purchase of 100 cows). The annual profit from the sale of milk is 11 million, that is, as we said, all costs will pay off in about a year and a half. Но мы все же рекомендуем закладывать в планы окупаемость в 2 года, поскольку на первом году гарантированно возникнут различные форс-мажоры, дополнительные расходы и траты.

Где взять деньги

Как бы там ни было, не каждый начинающий предприниматель сможет выложить 6–12 миллионов для старта полноценной фермы. Если у вас нет таких денег, всегда можно найти приемлемые варианты. For example, in Russia there is a support program for beginner farmers, which provides for the issuance of up to 2 million rubles for raising agriculture. Any farmer who has registered no later than three years before applying can receive it. Two million is enough to get 20 cows and start a business.

In some regions, subsidies are given every year, so if you work responsibly and show positive results, you will be able to receive payments repeatedly. At the same time, you need to understand that the subsidy is free aid, that is, you will not have to pay it back or return interest. If the subsidy fails, then you should look for investors. Make a competent business plan, draw up your vision for the development of the enterprise, calculate the possible risks and contact investors: they will certainly be interested in interesting offers.

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