You will know why dairy farming is a good business, and what to look out for when you are starting out, because I am going to share some of my experiences (I was involved directly in dairy farming for three+ years).
Dairy Farming, especially in Pakistan, is a dream business for a lot of people. A lot of seasoned and would-be entrepreneurs have already jumped onto the Dairy Farming bandwagon in Pakistan, and even more so like to talk about getting into dairy farming.
This is the small scale dairy farming that a lot of people in Pakistan want. They arre searching for dairy farming business plans, and dairy farming feasibilities…but before we get to that, have you asked yourself this question, “why start a dairy farm?”
Why Start A Dairy Farm
Why did I start a dairy farm? Now, the simplest answer for many can be, “dairy farming is profitable,” that’s why.
Well, I started a dairy farm not because it was “profitable” on paper. Too many people simply read the SMEDA Dairy farming feasibility study, and decide that’s what they want to do. That’s now how I started.
Yours truly worked on a dairy farming project starting in June 2009. My interest was pretty much ‘academic’ at first; just knowing how the business and the animals operate. It was after almost a year of travelling in and around Punjab, meeting countless number of people in the field, discussing and debating with some very qualified dairy farming consultants and breeders, that I decided to dip my toes in this project.
I was interested in quite a few facets of Dairy Farming:
- The Dairy Farming Business Model: Dairy farming has a very unique business model, and no other business has the capability of multiplying its assets while still producing revenue. Remarkable.
- The Current Situation: One of many lessons that Richard Branson has taught me is that you should get into a business where you think you can do better. Dairy farming, I knew, had a very, very large room for improvement (it still does!).
- A Very Solid Demand: A lot of businesses and entrepreneurs would consider a ‘demand’ for something a good enough reason to get into any project. But for me, dairy farming is not only the demand of the market, but also a need. People need healthy, quality milk (and meat). It fits in with the idea of for-profit philanthropy where I stand a chance of actually helping people out, and earning prayers as well as profits. Now that’s an inspiration!
- Super Integration: This was not vertical integration as much as it was super integration. I already have two independent projects, one agriculture farming and the other is milk supply within Lahore, Alhumdulillah. The dairy farm has the potential of sitting in very nicely between the two, and providing wholesome integration. Although integration of any two businesses, much less three, is a pain in the neck (amongst other body parts), dairy farming provides me with the perfect long-term inspiration for working on these three projects!
Warning: Know This Before You Start Dairy Farming
Most of the things people say, they just say them without much thought. They’d discourage you from doing anything different. I for one won’t do that. And having said that, following are the main points – so far – that should be considered when starting your own dairy farm:
1. Dairy Farming is a long term project.
There are no two ways about it. The time when you actually start seeing profits, IF a lot of things go right, is at least three years, usually five years. If you start taking out profits from it before three years, be prepared to inject more money in to it afterwards. But the upside to this remarkable business model is best explained by the following example that I frequently give to my friends and would-be entrepreneurs:
- I start a shoe shop, selling shows. You start a dairy farm, selling milk.
- After three years, if both of us do well in our businesses, I’d be richer than you.
- After six years, I’d have five branches all over the city, and will still be richer than you. You’d have great cash flows but you will find it hard to beat my retail outlets.
- Ten years later, it won’t matter how good I am doing, you will be much richer than me, in terms of assets, and most importantly, in terms of cash in hand.
- After 10 years, no business seem to even come close to the almost logarithmic growth of a dairy farm.
So if you can train yourself to actually think slow and steady, rather than fast and wobbly, then dairy farming is definitely something to consider.
2. The Most Important Factor is Currently the Hardest
The hardest part of setting up a dairy farm is the procurement of good-quality, high-yielding, environment-hardened animals. This is also the most important activity for an owner of a dairy farm.
Buying high milk producing cows and milking buffalo is not easy and one of the most difficult things in the dairy business.
You can go for imported cows, but I did not and I recommend that you don’t either.
A lot of people will tell you that you shouldn’t because they are expensive. I want you to know that imported cows are not expensive. If you are paying 140,000 (PKR) for a cross-bred cow, then paying 180,000 for an imported cow does not make the cow ‘expensive expensive’, it just makes it ‘relatively expensive’. And your target is not to increase the number of heads, but to increase the number of liters of milk. So an imported cow averaging 25 to 30 liters per lactation is much better than a cross-bred cow averaging 14 to 18 liters per lactation. The ROI is just plain and simple and you should stop listening to people who tell you otherwise.
But that’s not the reason why you should not get imported cows. The number one problem with imported cows is that they are unable to withstand the blast of heat of the Pakistani summers. Setting up the right infrastructure is essential, but that is not the only thing that you’d have to look into. There is disease and the very little margin of error that the imported cows give to you and your management.
I would suggest you do what I did; find good-quality locally bred cows, make sure that your dairy farm shed and cooling infrastructure is very much in place and then run the farm for at least a year to gauge how well your infrastructure (shed, cooling etc) is handling your locally-bred cows.
But that brings me back to the main point: finding high-quality locally bred cows is the hardest thing you’d have to do. It is also the MOST IMPORTANT thing for any dairy farm. As I have repeated this repeatedly (!!), a dairy farm’s main function is to procure and breed good-quality cows. The milk is a by product of that main function.
A Dairy Farm’s Main Business is to Procure and Breed Quality Cows and Buffalo.
So be prepared to hunt down good cows and buffalo wherever you can find them. I remember travelling a total of 2000 kms plus, by road, all over Punjab, in one week, just to see and meet cow breeders. I didn’t pay half as much attention to the shed that I was constructing, or even the silage pits that were being prepared at the time, because purchasing the right animals is that one 20% activity that gives more than 80% of the result.
3. Finding the right people
Finding the right person to manage your dairy farm is also something to pay VERY close attention to. Stealing milk is very easy. If you do not trust the person who is managing the farm, then that’s a losing proposition. You should pray that God helps you find that person. You can also start with a solid attitude of trust, of reward and of accountability. I can write quite a few things on how to deal with people, because that is ALL of this is about, but suffice it to say for now, that one of the hardest things to do in dairy farming – just like in any other business – is to find the right people to manage and carry your dairy farm forward.
Details of who’s who and how many people should do what activity, those things are not the scope of this article and may be covered/posted later, God willing.
Finding dairy farming technical help like that of vets and professional consults for animal feeding etc is NOT a problem, especially here in Pakistan. That is again one of the benefits of dairy farming, that the infrastructure that only a government can provide, is ALREADY IN PLACE in Pakistan. Sure there are problems, but it is good enough for you to not complain and get some work done.
This is just a run down of my thoughts on dairy farming and some – just some – of the pitfalls that you should look out for. By God’s Grace, my dairy farm was operational for about 4 months when I first wrote these thoughts and I am happy that I started this dairy business.
God guide and bless us all. Good luck to you in your conquests and queries.
Thanks to the overwhelming response and feedback on this post, I am happy to report that the dairy farming guide is available for download.
You can know more about it and purchase it if you are serious about starting a profitable dairy farm business.
Thanks. And God bless.
NOTE: Some friends and readers think I started selling milk because I had a dairy farm! That’s absolutely not true. Selling milk is different, producing milk is different. Both are completely two separate, very distinct businesses.
I sold milk (built a brand, and we were Alhumdulillah profitable in the first month) in Lahore. This dairy farm – along with crops – were 3 hours away from Lahore, in District Pakpatttan. Two different businesses, two different teams, two different operations.
If you have any confusion about this, don’t hesitate to contact me.
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