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Cost and returns of establishing successful dairy farm

If you are interested in farming you might have noticed how dairy farming has of late become popular in Kenya. Are you interested in dairy farming but you lack know how on where to start and what to expect along the way? Don’t you worry, we are here to guide you. However, it’s your call since our research and analysis are just assumptions and are due to alter depending on a number of items.

In Kenya, intensive systems are the most popular and comprise both zero-grazing and semi-zero grazing. An estimate of the returns and cost can be calculated as shown below.

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Critical Factors For Dairy Production

  1. Land

There is nowhere is said you have to own land for you to be a dairy farmer. However, you can lease, some farmers in Nakuru have leased land and has kept over 500 heads of cattle which rather gives them millions in return.

  1. Labor

Whether you depend on machinery or humans, intensive labor is paramount in dairy production. Labor is estimated at about 45-50% of the total cost.

  1. Capital

In dairy farming, the most important capital is stocking the cows and construction of the cow shed, milking crutches fencing, as well as equipment. In Kenya a good in-calf heifer varies from 40,000-200,000 depending on genetic potential. Cow sheds that are simple and can hold upto 4 cows are estimated to cost 50K to 100K depending on what you use as material and labour. However this cost can go down if one uses locally available materials such as timber, building stones, rainwater and home labor.

Crucial recurrent expenditure costs include AI, purchase of feeds, heath care and milk marketing and sales (preservation, transport and value addition).

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Projected Returns From Dairy Production

We have used these examples just to show you how to calculate expected returns from your dairy farming and you should only use it as guidelines. It is very crucial that each farmer uses this guideline to calculate production figures depending on costs of feeds and labor in his/her area.

It is always wise to reduce costs as much as possible having in mind that some costs such as feeds and healthcare are the foundations of profitable dairy farming.

Overall Assumptions:

  • No dairy cow dies
  • A dairy cow eats feed amounting to 3% of its body mass dairy
  • The calves are raised well as stock replacement or sold at early stage/maturity
  • AI is the only practice
  • A bale of hay weighs 14.4 Kg
  • Milk is sold at the farm without value addition or processing
  • Labor costs vary with systems and locality.

We will now use an example of one Friesian cow weighing around 400 kg raised in central region under zero grazing management based on bought feeds.

Feed Stuff Amount (fed based on dry matter)
Napier grass 5kg
Lucerne 3kg
Dairy meal 4kg
Macklick Super 120 grams
  1. Costs Annual

Fixed  Costs Amount (Ksh)
Dairy Cow 80,000
Dairy shed 20,000
Recurrent Expenses  
Forage 16,500
Concentrates 30,000
Health Care 15,000
AI 800
Calf 21,000
Labor 60,200
Total 143,500
  1. Returns (Annual)

Milk 300,000
Calf 30,000
Manure 10,000
Total 340,000

Gross Profit = 196500

Therefore, in your first year, net profit per cow could be 16,375 per month. Now if you keep more animals you definitely lower your costs and increase your margins. Considering that you could make your own rations, and do value addition to your milk returns per month per cow could be as high as Ksh 20,000.

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