Buffalo Farming Project Report for A Dairy Farm – Cost and Profit

Project Report for A Dairy Farm

“Project report for a dairy farm is an essential document to take loan and subsidy.”

Dairy farming is an essential source of subsidiary income to small/marginal farmers and agricultural labourers. In addition to milk, manure from animals presents a good source of organic matter for increasing soil fertility and crop yields. The Gobar Gas from the waste is used as fuel for domestic objects and running engines for drawing water from the well. The surplus fodder and farming byproducts are gainfully used for feeding the animals. Bullocks supply almost all draught power for buffalo farm operations and transportation. Since agriculture is mostly periodic, there is a possibility of getting employment throughout the year for many persons through buffalo dairy farming. Thus, the dairy is also employed throughout the year. The primary beneficiaries of dairy businesses are small/marginal farmers and landless workers. 

Project Report for A Dairy Farm

India is thriving, endowed with the largest livestock population in the world. It accounts for about 57.3% of the world’s buffalo population and 14.7% of the cattle population. Thus, there is an enormous scope/potential for increasing milk production by profitable Murrah buffalo farming. We will tell you all the buffalo farming tips in this buffalo farming project report. It can help you to start a buffalo farm.

Financial Assistance from Banks for Buffalo Farming

Financial Assistance from Banks

For dairy projects with large outlays, detailed project reports will have to be made. The finance items would include capital asset items such as purchasing milch animals, construction of sheds, Equipment, etc. The feeding cost during the initial one/two months is capitalised and given as a term loan. Cost towards land improvement, digging, fencing of well, commissioning of diesel engine/pump set, essential servants’ quarters, godown, electricity connections, transport vehicle, milk processing facilities etc., can be considered for a loan. 

Buffalo Farming Project Report for Bank Loan

A beneficiary can prepare the project report for a buffalo farm after consulting local technical persons of the State Animal Husbandry Department, DRDA, Dairy Co-operative Society / Union / Federation / commercial dairy farmers. If possible, the beneficiaries should also visit growing dairy farms and government/agricultural university / military dairy farms in the vicinity and discuss the profitability of dairy farming. Good practical training and expertise in the buffalo farming business will be highly desirable. If existing in the villages, the dairy co-operative societies would provide all supporting facilities, particularly for the marketing of fluid milk. The nearness of dairy farms to such a society, veterinary aid centre, artificial insemination centre should be ensured. 

Details in Project Report for A Dairy Farm

The project report for a dairy farm should detail the following information on technical, financial, and managerial aspects based on the type of unit and capacity.

1. Technical Needs for Buffalo Business Plan

Technical Needs for Buffalo Business Plan

  • Land & land development (Location, proximity, area, suitability to the road, site map etc.)
  • Proposed capacity / No. of milch animals
  • Civil structures (Sheds, office quarters, storeroom, milk room, staff room etc.)
  • Equipment, Machinery and Plant (Chaff cutter, Feed grinder and mixer, Milking pails/milk cans, Silo pit, Milking machine, Biogas plant, Equipment for manufacture of products, Bulk coolers, Truck/van)
  • Housing Type of housing (Area requirement – Adults, Calves (less than 1 year), Heifers (1-3 years)
  • Animals (Source of purchase, Proposed species, Proposed breed, Place of purchase, Distance, Cost of buffalo)
  • Production parameters (Milk yield (Ltrs. per day), Order of lactation, Conception rate, Lactation days, Dry days, Mortality(%) – Adults, Youngstock)
  • Breeding Facilities (Location-Distance (km.), Availability of semen, Availability of staff, Source, Expenditure per animal/year )
  • Feeding (Source of fodder and feed – Dry fodder, Green fodder, Concentrates. Fodder crop rotations- Summer, Kharif, Rabi. Fodder cultivation expenses, costs and Requirement)
  • Veterinary Aid Source (Availability of labour and other staff, Location-Distance (km.), Types of facilities available, If own arrangements are made-Employed a stockman/veterinary doctor/consultant, Periodicity of visit, Expenditure per animal per year)
  • Water (Source, Availability of sufficient quantity for drinking, Quality of water, cleaning and fodder production, type of structure, design and cost)
  • Electricity (Source, Connected load, Approval from SEB, Problems of power failure, Arrangements for generator)
  • Marketing of other products (Animal – age, price expected, place of sale, Manure Qty./animal, Price/unit (Rs.), Empty gunny bags- Number, Cost/bag (Rs.)
  • Marketing of milk (Source of sales, Distance (km.), price realised – (Rs. per litre of milk), place of disposal, Basis of payment, Periodicity of payment

2. Financial Needs to Start a Buffalo Dairy Farm

  • Financial viability (Net Present Worth, Internal Rate of Return, Benefit-Cost Ratio)
  • The financial position of the borrowers (Whether Income Tax, Debt Equity Ratio & other tax obligations are paid up to date, Profitability Ratios, Whether the audit is up to date)
  • Lending Terms (Rate of Interest, Nature of Security, Repayment Period, Grace Period)

3. Managerial Overview in Buffalo Farming India

( A ) Borrower’s profile:

  • Individual/ Co-operative Society / Corporation/ Partnership /Company /Others
  • Proposed business handling capability
  • Experience in the proposed activity 
  • Financial soundness
  • Technical and other specific qualifications
  • Managerial/Technical staff and adequacy thereof

    (B) Others:
  • Financing bank’s name
  • Training facilities for buffalo farming training
  • Support available from State/ Central Government
  • Regulatory approvals, if any etc.

4. Appraisal of the Project Report for a Dairy Farm

The scheme so formulated should be presented to the nearest branch of the bank. The bank’s officer can support in preparing the plan or filling in the prescribed application form. The bank will then check the scheme for its technical feasibility and financial viability.

5. Sanction and Disbursement of Bank Loan

After ensuring financial viability and technical feasibility, the scheme is sanctioned by the bank. Then, the loan is disbursed in kind in 2 to 3 stages against the creation of specific assets such as the construction of buffalo shed, purchase of equipment and machinery, purchase of animals and recurring cost on purchase of feeds/fodders for the initial period of one/two months. Finally, the end-use of the funds is verified, and the bank does constant follow-up.

6. General Lending Terms in Project Report for A Dairy Farm

Outlay: The outlay of the scheme depends on the local circumstances, unit size and the elements included in the project. Prevailing market prices may be estimated to arrive at the outlay.

Margin Money: Margin depends on the class of the borrowers and ranges from 10 to 25%.

Interest Rate for an ultimate borrower: Banks can decide the interest rates within the general guidelines. However, for working out the economic viability and bankability of the model projects, we have assumed the interest rate as 12 % p.a.

Security: Security will be as per RBI guidelines issued from time to time.

Repayment period of loan: The repayment period depends upon the gross surplus in the scheme. The loan will be repaid in convenient monthly/quarterly instalments, usually within a period of five to seven years.

Insurance: The animals and capital assets may be insured annually or on a long term master policy, wherever applicable. 

7. Economics of Dairy Farming

Economics of Dairy Farming

A model buffalo farming India project with 10 buffalo for dairy farming is given below. This indicates the applicable input and output costs and the parameters observed at the field level, which may be incorporated. Let’s begin with the buffalo farming information.

( A ). Capital Cost of Buffalo Farming in India
Cost of buffaloes  5,00,000
Cost of transportation 10,000
Animal shed’s construction 60,000
Calf shed’s construction 24,000
Chaff cutter and

Equipment’s cost

60,000
Total 6,54,000
(B). Techno-Economic Parameters in Project Report for a Dairy Farm
Type of Animal Graded Murrah Buffalo
No. of Animals 10
No. of animals/batch 5
Murrah buffalo price (Rs./animal)  50,000
Transportation Cost/Animal 1,000
Cost of culled animal 5,000
Average Milk Yield (litre/day)  10
Cost of construction per sqft (Rs.) 120
Floor space (sqft) per adult animal 50
Floor space (sqft) per calf 20
Cost of chaff cutter (power-operated) (Rs.)  50,000
Cost of equipment per animal (Rs.) 1,000
Veterinary aid/animal/ year (Rs.) 1,000
Insurance premium (% per annum) 5
Concentrate feed quantity in one bag(kgs.) 50
Cost of green fodder (Rs./kg) 1
Cost of concentrate feed (Rs./kg)  12
Cost of dry fodder (Rs./kg)  2
Salary of labourer per month (Rs.) 4,500
No. of labourers 1
Electricity cost and water/animal/year (Rs.) 150
The selling price of milk/litre (Rs./litre)  26
The sale price of gunny bags (Rs.per bag) 10
Margin (%)  25
Rate of interest (%) 12
Repayment period (years) 5
Lactation days 270
Dry days 150
(C) Feeding Schedule of Buffalo Dairy Farming in India
Type of

feed

Lactation Dry
Price (Rs.) Qty. (kg) Cost Per Day (Rs.) Qty. (kg) Cost Per Day (Rs.)
Concentrate

Feed

12 5 60 2 24
Green Fodder 1 25 25 20 20
Dry Fodder 2 4 8 5 10
Total  93 54

ii) Total Concentrate Feed Consumed (Kgs.)

Year Lactation Dry Total No. of Gunny Bags
Year 1  8,250 300 8,550  171
Year 2  11,250 2,700  13,950 279
Year 3 11,250 2,700 13,950 279
Year 4 12,000 2,400  14,400  288
Year 5  12,000  2,400 14,400 288

iii) Lactation Chart in Project Report for a Dairy Farm / Animal

Year I Batch II Batch
Lactation days Dry days Lactation

days

Dry days
I 240 30 90 0
II 240 120 210 150
III 210 150 240 120
IV 210 150 270 90
V 210 150 270 90
(D). Economics of Murrah Buffaloes Dairy Farm Project Report
Particulars Years
1st 2nd 3rd 4th 5th
Sale of Milk 4,29,000 5,85,000 5,85,000 5,85,000 6,24,000
Sale of Gunny bags  1,710 2,790 2,790 2,880 2,880
Total 4,30,710 5,87,790 5,87,790 5,87,880 6,26,880
Cost of feeding during

lactation

1,53,450 2,09,250 2,09,250 2,23,200 2,23,200
Cost of feeding during dry

period

8,100 72,900 72,900 64,800 64,800
Veterinary aid and breeding

charges

10,000 10,000 10,000 10,000 10,000
Labour charges 54,000 54,000 54,000 54,000 54,000
Electricity and misc. charges 1,500 1,500 1,500 1,500 1,500
Insurance charges 25,000 25,000 25,000 25,000 25,000
Total 2,52,050 3,72,650 3,72,650 3,78,500 3,78,500
Surplus  1,78,660 2,15,140 2,15,140 2,09,380 2,48,380
( E ). BCR & IRR of Buffalo Dairy Farm Project Report
1st 2nd 3rd 4th 5th
Capital

Costs 

6,54,000
Recurring

Cost 

2,52,050 3,72,650 3,72,650 3,78,500 3,78,500
Total

Costs

9,06,050 3,72,650 3,72,650 3,78,500 3,78,500
Buffalo Farming Profit 4,30,710 5,87,790 5,87,790 5,87,880 6,26,880
Net

Buffalo Farming Profit 

-4,75,340 2,15,140 2,15,140 2,09,380 2,48,380

Profit margin calculation in dairy farming business = Total Earnings  – Total Cost = 8,60,560 – 4,75,340 = 3,85,220

Total Earnings of 5 years = 2,15,140 + 2,15,140 + 2,15,140 + 2,15,140 = 8,60,560

Note: The information provided is for learning purposes only, it may change over time. 

FAQs of Dairy Farm Project Report for 10 Buffalo

Que. Is Buffalo Farming Profitable Business?

Ans. Yes, buffalo farming is a very profitable business.

Que. Which Buffalo is Best for Dairy Farming?

Ans. Murrah buffalo is best for dairy farming.

Que. What is The Best Food for Buffalo?

Ans. Fodder is the best food for buffalo.

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