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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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What to consider when starting a dairy farm

Whatever your experience and background, there are a few things you should know before you begin milking dairy animals.

Build up a Business Plan and SWOT Analysis

Remember that a dairy farm is a business. Advancement of detailed marketable strategy and a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) of your plan and the assets you readily have will be basic to the accomplishment of your business. What number of cows will you milk? Where will you sell your milk? Will you hire workers? What amount of cash do you have to live on after the dairy bills are altogether paid? Your marketable strategy ought to incorporate an income plan that will enable you to set sensible projections for your expenses and cost of production.

Consult the Experts

Regardless of whether you experienced childhood with a dairy cow and figured out how to cater and milk cows from your folks and grandparents it is imperative to seek guidance from specialists in the dairy business as you build up your strategy for success and plan your management framework. Other dairy producers are awesome resources. Attend field days and open houses on dairy farming in your general vicinity and different parts of the county or country. When going to different homesteads find out what has functioned admirably on those farms and what has not worked, but rather remember that since something worked well at one farm does not mean it will work for you on your homestead.

Notwithstanding farmers, converse with veterinarians, nutritionists, agronomists, brokers, expansion tutors, and others that can give alternate points of view on management of your dairy. Lack of milk and milk products in Kenya is a genuine concern. Luckily, this implies business visionaries and farmers can consider this to be a lucrative investment they can attempt. Basically, knowing how to take off in this financially valuable undertaking is the most basic factor.

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Availability of Land

Dairy farming can be practiced on a piece of land ranging from 0.1-1,000,000 acres, depending on the scale of farming. This is the first requirement that any prospective farmer ought to meet.

Dairy farming can be done on a land running from 0.1-1,000,000 acres, depending upon the size of the scale of farming. This is the primary prerequisite that any forthcoming farmer should meet.

Distinguishing the Right Livestock Breeds

There are different variety of dairy cows in Kenya including both local and exotic breeds. For more returns, a farmer should go for exotic breeds, for example, Friesian, Ayrshire, Jersey and Guernsey. The farmer should consider acquisition and upkeep expenses, and possible returns given a specific breed. A decent dairy cow may cost between KSh. 100,000-500,000.

Getting Money (Capital)

Dairy farming is a genuine business venture. Capital is, in this way, obligatory for purchasing domesticated animals, farm equipment, establishment of structures and purchasing of animal feed, among other basic prerequisites. You can draw this from a bank account, wage or loan.

Setting Up Necessary Structures

Dairy cows must be kept under favorable living conditions free from rains, winds and unnecessary human interference. This calls for establishment of suitable structures

Supply of Feed

Feeds are the most basic prerequisites for any fruitful dairy farming undertaking. It is essential to have a solid source of animal feed even before the animals get onto the farm.

Other than the above, a farmer needs to acquire adequate information the care of the animals and general maintenance of the farm.

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