Dairy farm business plan – a ready-made example with calculations

The organization of a small dairy farm is gaining more and more popularity among start-up entrepreneurs. After all, such a tasty and healthy food product as milk is always in constant demand.

More and more people want to buy farm products. Moreover, the policy of import substitution in the field of agriculture and subsidies from the state contribute to the development of this direction. An intelligent business plan with calculations and a step-by-step study of important issues
will help to implement the idea . To begin with, it is worth evaluating the advantages and disadvantages of the business.

prosMinuses
Possibility of organizing a family businessSignificant investment
Demand for productsPayback within 2-3 years
Profitability 30-40%Dependence on the food base
Governmental support
Different business format

The predominance of positive aspects allows us to talk about the prospects of business. You just need to choose the format of the farm based on financial capabilities and your preferences.

Features and formats of dairy farms

Mini-farm with 10 to 100 head of livestock holds 40% of the market share
An excellent option for a family business, outperforming large competitors in several indicators: increase in dairy herd, milk yield and milk quality

Average dairy farm with over 100 livestock and 30% market share
Requires additional machinery and equipment, staff

A large farm with several hundred cows represents 20% of the market.
Difficult to organize option, more suitable for experienced farmers with large investments and long payback

It is preferable for beginners to make a choice from the first two options, the least expensive and easy to implement.

Dairy farm step by step business plan

Business planning is based on the solution of the following questions: how to organize the economy, what is needed for this, how much it will take to invest at the start, what is the profitability and the likelihood of risks.

Having decided on the format, they are looking for a source of funding . In addition to your own and credit funds, you can get material assistance in the following areas:

  • Subsidizing from regional sources: to receive subsidies, they apply to local authorities
  • Shared reimbursement of 30-40% of capital investments from the federal fund: allows you to partially repay the cost of livestock, machinery and equipment
  • Subsidies for lending with the condition of obtaining a loan from an accredited bank: the state reimburses up to 100% of the rate, freeing the farmer from overpayments

Programs may vary by region. You can find out their specific conditions by contacting your regional business support center.

Demand and competition analysis

An important stage of the business plan is to study the market of consumer demand and offers of the nearest competitors, their pricing policy and advantages.

The main threat to small businesses is represented by large enterprises that manufacture products with long shelf life. They use expensive equipment to pack milk in special containers.

Therefore, farmers are forced to fight for the sales market with an emphasis on the quality of dairy products. But thanks to support from the state, private farming has gained a large market share and continues to develop.

Search for sales markets and calculation of profitability

At the stage of business planning, stable distribution channels for products should be identified. It is known that milk has a short sales period, so spoilage of the product, which promises losses to production, should not be allowed.

Possible implementations include:

  • Sales to small dealers, grocery stores for sale
  • Wholesale sales to a large processing enterprise as the most attractive option
  • Self-processing of milk to obtain dairy products: cottage cheese, butter, sour cream, kefir, etc.
  • Realization on the market, private individuals
  • Sales to children’s institutions, hospitals, canteens

You also need to think over an advertising campaign that can expand sales markets.

Effective tools will be:

  • Creating your own website, groups in social networks
  • Promotion via the Internet – platforms, forums
  • Use of outdoor and media advertising
  • word of mouth

Now let’s calculate the profitability of the business. One cow gives about 5 thousand liters of milk per year. From 50 heads we get 250 thousand liters annually. Based on the average wholesale price of 25 rubles. annual earnings from the sale of one milk will amount to 6 million 250 thousand rubles, which will make it possible to recoup investments in 2-3 years of work and talk about a profitability of 35%.

We decide on the land and the premises for the farm

This stage involves finding a site for building a farm. For 100 heads of cattle, at least 2 hectares of land with a pasture and a reservoir nearby will be required. The territory will accommodate a cowshed and a paddock for keeping animals, a warehouse for storing food, household buildings for machinery and equipment. The cost of renting land on average starts from 30 rubles. per square meter.
There are two options for starting a business:

Building a farm from scratch : it is advisable if you have your own land or on the site of an abandoned barn. To purchase a plot, you need to contact the local administration, draw up the necessary documents, and obtain permission. This option will require a significant initial investment. The farm, designed for 50 heads, will cost 6 million rubles.

Buying ready-made premises is a less expensive way to start a business. In this case, the following requirements for the premises and its repair are taken into account:

  • availability of sewerage, water supply, ventilation, heating and lighting;
  • wall decoration is made in accordance with the requirements, the walls are plastered and whitewashed;
  • the location of the floor at a slight slope with drains for the removal of liquid sewage

The nuances of arranging the premises depend on the type of animal keeping:

  1. Tethered, with milking cows in the stall
  2. Tethered, with distillation of cows for milking in a separate area
  3. Tetherless way

Cows should be milked every 12 hours, while observing the requirements of hygiene. It is also necessary to monitor the cleanliness in the barn, regularly changing the bedding and taking out the manure to a separate place.

In the room, you need to allocate space for stalls at the rate of 6 squares per cow, erect fences and allocate space for the maternity area.

Registration of permits

To open a dairy farm, you should collect a package of documents:

  • Certificate of ownership or lease agreement for land and buildings
  • Certificate of registration of an individual entrepreneur or a legal entity, involving registration with the tax office by submitting the necessary documents: an application, TIN, passport, charter with an authorized capital for an LLC and payment of state duty.
  • Taxable base: STS with a deduction of 6% from revenue or 15% from net profit. Specified OKVED codes: 01.21 – allowing to breed cattle, 15.51 – milk processing and 52.27.11 – to carry out wholesale and retail trade in dairy products. For a small family business with a livestock of 10-30 cows, it is enough to register a peasant farm
  • Quality certificates for products
  • Veterinary certificate
  • Permission from Rospotrebnadzor and the fire service 01.21 cattle breeding, 15.51 milk processing and 52.27.11 wholesale and retail trade in dairy products

Purchase of equipment and machinery

An important component of the business plan is the acquisition of machinery and equipment to equip the farm. Its quantity will depend on the number of livestock. Should be purchased:

  • Tractor for transporting feed and other agricultural needs worth 300 thousand rubles.
  • Mower for harvesting hay for 120 thousand rubles.
  • Attachments for the tractor – 200 thousand rubles.
  • Transport for the transportation of dairy products worth 400 thousand rubles.
  • Milking machine at a price of 20 thousand rubles. a piece
  • Milk cooler – 80 thousand rubles.
  • Inventory: buckets, shovels, pitchforks, cans. Drinkers, feeders – 100 thousand rubles.
  • Mini-workshop for the production of dairy products and packaging of milk from 900 thousand rubles.

On average, it will take from 1-2 million rubles to equip a dairy farm . You can save money by buying used equipment and machinery or bypassing some of the items on the list.

Purchase of cows or calves

Another significant cost item is the purchase of dairy cows or grown heifers. Their cost varies: a cow with 2-3 calving costs from 70 thousand rubles , and a three-month-old heifer that needs to be raised costs 15-20 thousand rubles . If you buy young animals, then the profit will shift by a year.

It is necessary to acquire dairy breeds, the best of which are considered: Kholmogory, Holstein, Dutch, black-and-white. Their representatives are famous for their high milk yield and quality of milk. Buying elite breeds, you will get highly productive calves in the future. That will serve as a source of additional income on their breeding and sale.

Purchase of feed

An equally important issue is the purchase of feed, as their quality affects milk yields. The diet of cows should consist of compound feed, silage, hay, salt and clean fresh water. At the same time, they adhere to a balanced diet with mineral supplements.

It is more profitable to buy food in bulk from trusted manufacturers. At this point of the plan, an amount should be laid at the rate of 15 thousand rubles. per year per person.

Hiring

Next, you should resolve the issue with the farm staff, the number of which will depend on the volume of the enterprise. If you have CPK, then family members will be among the employees.

If your farm is medium in size, then at first you will need at least two milkmaids and two workers . With the automation of production, they will work in shifts. Organizational functions and accounting at the initial stage can be carried out by an entrepreneur.

In the future, the staff is subject to expansion through the inclusion of other job units: manager, marketer, driver, auxiliary workers. You can not do without such veterinary services as the prevention and treatment of diseases of the udder, reproductive system, and hooves. The cost of annual veterinary care will be 100 thousand rubles .

How much to invest at the start

Now you can calculate the expense items for organizing a business. As an example, let’s take a farm with 50 head of cattle. For clarity, let’s summarize the data in a table:

Item of expensesAttachments
Preparation of the territory with summing up all communications3 million rubles
Farm rental30 thousand rubles
Equipping with the necessary equipment and technology2 million rubles
Buying cows3 million rubles
Business registration20 thousand rubles
Advertising and marketing40 thousand rubles
Purchase of feed20 thousand rubles
Total:8 million 110 thousand rubles.

The indicator is averaged and may be a larger or smaller amount depending on the specific region of location, purchased machinery and equipment.
Current expenses will require about 300 thousand rubles . on: rent, wages to workers, transport and utility costs, production costs.

Business risks

The negative impact on the business of the following risks should also be taken into account:

  • An increase in the level of competition can reduce the profit of the enterprise. To minimize the risk, it is necessary to take appropriate measures in a timely manner: expanding the range of dairy products, focusing on advertising, setting prices below competitive prices, high quality products
  • A drop in demand can be prevented by a competent approach to planning activities, searching for a target audience and distribution channels in the early stages, and ensuring competitive advantages
  • Low quality products should not be allowed in any case. It is important to keep the milk composition constant by taking samples. Laboratory tests will help to identify the causes affecting the taste of the product and eliminate them.
  • Livestock diseases cannot be completely eliminated, but through preventive measures and regular veterinary examinations, the risk is minimized.

A correctly drawn up business plan, taking into account the peculiarities of the dairy business, will help to avoid many problems. Aspiring entrepreneurs should be ready to make significant investments in business and overcome possible difficulties along the way.]

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