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Dairy Farming in India: An Amazing Business Idea

Dairy farming is one of the most profitable agriculture business ideas that might come in your mind. With proper management, diary farming in India is certainly a money making agriculture business. Obviously, there are criteria to be fulfilled before dairy farming becomes profitable. The selection of cattle, feed, management, etc. plays a crucial role. So we present to you this article on dairy farming in India.

India is the largest milk producer and ranks first position in the world contributing 24.64% of global milk production in the year 2021-22. The dairy industry in India’s size reached INR 16,792.1 Billion in 2023. It contributes 5% to the national economy and employs 80 million dairy farmers directly.

Looking forward, the dairy industry in India is expected to reach INR 49,953.5 Billion by 2032, exhibiting a growth rate (CAGR) of 13% during 2024-2032. The market for butter and spreads is predicted to grow at an 8% CAGR to $4.2 Bn by 2026.

Setting up a dairy farm in India involves several steps and considerations. Here’s a detailed guide:

  • Location : The Location depends upon methods if you will use traditional methods than rural areas is best but incase if you are planning it with modern methods than urban regions is best for you.
  • Selection of Right Breed : The climate and conditions in India make certain breeds more suitable for dairy farming than others. The popular choice for exotic cattle breeds in dairy farms is the Holstein Friesian breed, known for its high milk production capabilities. Jerseys are efficient grazers and do well in smaller land holdings, which are common in India. Other Indian cattle breeds include Sahiwal, Gir, Rathi, Tharparkar, Red Sindhi, Guernsey, Ayrshire, and Normande.
  • Infrastructure : The basic requirements of dairy farming in India include proper shed construction, surplus area of land for cultivation of green fodder (1-2 acres of land is sufficient for 15 cows), adequate water supply, good breed of cows (high-yielding cows like hf, jersey, Sahiwal, etc.), fodder management (dry fodder, green fodder, and concentrate), labor, and proper vaccination schedule.
dairy farming in india cost

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Here’s a detailed breakdown for a dairy farm setup in 1-2 acres with the Sahiwal breed:

  • Land Cost : The cost of land varies significantly across India, depending on the location. For a 1-2 acre dairy farm, the price can range from ₹10 lakhs to ₹50 lakhs.
  • Construction Cost: The construction cost includes the cost of building sheds for the cattle, storage rooms for feed, and other necessary infrastructure. The construction cost can range from ₹5 lakhs to ₹10 lakhs.
  • Cost of Cattle  : The Sahiwal breed is one of the best indigenous dairy breeds in India. The cost of a Sahiwal cow can range from ₹60,000 to ₹75,000. So, for a small-scale dairy farm with around 10 cows, the cost would be approximately ₹6 lakhs to ₹7.5 lakhs.
  • Feed Cost  : The cost of feed is a recurring expense and can vary based on the type of feed and the number of cattle. On average, the annual feed cost per cow can range from ₹20,000 to ₹25,000. So, for 10 cows, the annual feed cost would be approximately ₹2 lakhs to ₹2.5 lakhs.
  • Labor Cost : Labor cost is another significant recurring expense. Depending on the number of workers required and the local wage rates, the annual labor cost can range from ₹1 lakh to ₹2 lakhs.
  • Other Costs : Other costs include the cost of equipment (like milking machines), veterinary expenses, electricity, and water charges. These costs can add another ₹1 lakh to ₹2 lakhs per year.

In total, the initial setup cost for a small-scale dairy farm in India can range from ₹22.6 lakhs to ₹72 lakhs. 

Yes, dairy farming is profitable in India. However, profitability depends on various factors such as capital expenditure, Types of Breeds, feed cost, labor cost, management, feed conversion ratio (FCR), morbidity, etc.

The dairy industry in India has grown by approximately 12 percent during the last 5 years, with value-added products driving market growth. It is a significant contributor to farmers’ income as approximately 70 million farmers are directly involved in dairying.

Let’s break down the potential profit a dairy farmer can make in India:

  • Selling Price of Milk The price of milk charged by different dairy farms varies between Rs.58 – Rs.60 for one liter. 
  • Income from a Dairy Farm The income from a dairy farm depends on a variety of factors. If we try to estimate the income, this is how the figures look like- One liter of milk is sold at around Rs.60 in urban areas. With one cow giving at least 15 liters of milk in a day, revenue from the sale of milk of one cow comes to around Rs.900. Deducting the expense of the cattle feed, which is approximately Rs.130/day for a cow, the approximate profit earned per cattle for a day is Rs.770.

These are rough estimates that are being calculated taking into account just two factors- the selling price of milk, and expenditure on cattle feed. There are various other expenses that include deworming of the cattle, insemination, water, and electricity among others.

  • Income from By-Products While milk and other dairy products will account for the primary products for a dairy farm, there are also farmers who sell the by-products of their dairy farms. 

However, it’s important to note that these are approximate figures and actual profits can vary based on various factors like location, size of the farm, number of cattle, and market conditions. It’s advisable to do a detailed cost analysis before starting a dairy farm.

dairy farming in india milk

The potential profit for a dairy farm in India on 1-2 acres of land is

1. Land Cost The cost of land varies significantly across India, depending on the location. For a 1-2 acre dairy farm, the price can range from ₹10 lakhs to ₹50 lakhs.

2. Construction Cost The construction cost includes the cost of building sheds for the cattle, storage rooms for feed, and other necessary infrastructure. The construction cost can range from ₹5 lakhs to ₹10 lakhs.

3. Cost of Cattle The Sahiwal breed is one of the best indigenous dairy breeds in India. The cost of a Sahiwal cow can range from ₹60,000 to ₹75,000. So, for a small-scale dairy farm with around 10 cows, the cost would be approximately ₹6 lakhs to ₹7.5 lakhs.

4. Feed Cost The cost of feed is a recurring expense and can vary based on the type of feed and the number of cattle. On average, the annual feed cost per cow can range from ₹20,000 to ₹25,000. So, for 10 cows, the annual feed cost would be approximately ₹2 lakhs to ₹2.5 lakhs.

5. Labor Cost Labor cost is another significant recurring expense. Depending on the number of workers required and the local wage rates, the annual labor cost can range from ₹1 lakh to ₹2 lakhs.

6. Other Costs Other costs include the cost of equipment (like milking machines), veterinary expenses, electricity, and water charges. These costs can add another ₹1 lakh to ₹2 lakhs per year.

Revenue The price of milk charged by different dairy farms varies between Rs.58 – Rs.60 for one liter. With one cow giving at least 15 liters of milk in a day, revenue from the sale of milk of one cow comes to around Rs.900. Deducting the expense of the cattle feed, which is approximately Rs.130/day for a cow, the approximate profit earned per cattle for a day is Rs.770.

In total, the initial setup cost for a small-scale dairy farm in India can range from ₹22.6 lakhs to ₹72 lakhs. The daily profit per cow, after deducting the feed cost, is approximately ₹770. 

dairy farming in india cost

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Dairy farming is one of the most profitable farming businesses in India. Dairy farming in India achieved substantially high standards after the White revolution in India led by Dr. Varghese Kurien. This promoted the cooperative model of farming and improved the dairy farming scenario in India uplifting the lives of millions of dairy farmers. Dairy farming has always prospered since then. So, what we discussed today is a time-tested business idea that is proven to produce substantially high profits. All you need for that is to concentrate on a few points that we discussed in this article. With proper management of the farm, you can surely make some good money with Dairy farming.

Shuhaib Sherief
Shuhaib Sherief

Hi! I am SHUHAIB, an Agriculture graduate . I am deeply honored to contribute my knowledge and skills to the betterment of the Agriculture sector. Passionate in disseminating information on Agriculture in the form of creative blog articles on the internet.

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