How to Run Profitable Dairy farm with Low Milk Prices

Like any other business, you should know How to Run Profitable Dairy Farm even when Milk Prices are low.

Milk prices at the producer level, are always fluctuating in the Indian dairy market.   They change according to the global milk powder rates.   At present they are at their record low levels.  In states such as Maharashtra milk producers often have had to manage with per liter milk price of Rs. 16-17 .

So, how do we survive and manage dairy farming business with such milk prices?

If you are using the fodder grown in your own farm, you are forgoing income generated you would have generated by selling the fodder.  Variable and recurring expenses like labour wages will always be there. Even if you apply best management practices and  the animals fall sick you will incur doctor’s expenses.

We can’t expect cattle feed companies or pharmaceutical companies to lower the rates to help producers. Milk Co-operative Societies have also made delayed payments.

“Conquering the world” might be easier than running milk business with such huge losses.

It is said that,

“When there is thunderstorm – heavy showers, you respect it and survive.  The rain will stop soon !! “

You might know, Sachin Tendulkar & Virender Sehwag were once playing in England.  For initial 1-2 hours of the innings the atmosphere was cloudy, the pitch was lush green suited to swing bowling and the conditions were completely adverse for batting.  Rather than following their usual attacking style they did not even touch balls going outside the off stump.

They were completely focused on surviving – staying on the crease till it was sunny.  It was a lesson taken from past as India had lost many matches due to early dismissal of batsmen in foreign lands.

Relation between bowling advantage and cricket is equivalent to relation between dairy farmers and milk prices.

You bet, in such a scenario, no milk producer can afford the milk business………….

There can be some cases, when milk producers may be operating in “No profit no loss scenario”, but most of them will lose money in such circumstances.

Most of the of the farmers are bound to get frustrated in such situations, blame the business or the government and scratch their heads.   Demotivated, losing patience and becoming desperate, some may choose to close their business & sell out cows.  Some have to shut shops due to insufficient capital and other circumstances.

Here at PowerGotha we will teach you how to run dairy farming milk business when milk prices are low.  From analysis and observations we can state that, there is a model of sustainable milk business immune from milk rates just like a waterproof mobile immune to immersion in water 🙂

How to Run Profitable Dairy Farm with Low Milk Prices

There are 2-3 ways by which this can be achieved:

1. Damage Control – In case of low milk prices, you must control the damage by ensuring your animals are protected.
2. Insurance – Milk prices will always follow a cyclic pattern, when the rates are good you should save enough to sustain when the milk prices come down.
3. Own sales and distribution system

For the first two solutions, you must know where exactly is the money incurred in your business and on which factors is the production dependent.

And then, you must study the profit and loss statement of your business. You should study how much capital is needed to produce 1 liter of milk, for this you need to note every expense in a structured way. There is a scientific way to keep this record. You need to follow a very simple approach for this. Even the banks will not deny to provide loan. If you are noting the expenses in a notebook be sure you don’t lose it. In case you have a fear of losing the notebook, you can also use “PowerGotha Online Daily Record Book”. In case you have not explored it you can try it.

You can measure all the input and output by using our app here

#Damage control when rates are low

If your farm is a “PowerGotha” you can surely sustain in bad times, but for that first you need to understand what a “Power Gotha” is.

A “Power Gotha” is a dairy farm where:

1. The number of cows is always If the owner wants to keep the numbers constant he is earning money by selling the calves or cows he doesn’t prefer.
2. High yielding, good breed cows are born in-house only.
3. The owner maintains clear records of all income-expenses and animals.
4. Fodder / Silage for whole year is planned & managed in a proper way.
5. There is plenty of space for the animals to roam around & they are given supplements on a regular basis.
6. Clean Drinking water is available 24/7, for animals whenever they are thirsty.
7. Labor is well trained & milk is produced in a clean environment.
8. Where the farm owner is careful about capital expenditure and high investment, so that, even if the conditions are adverse he is not in financial crunch. Even in drought conditions the farm is not in loss.
9. Where you have not spent too much on buying cattle & construction of the farm.

Let us revise 5 main points which affect your milk business once again:

1. How to run profitable dairy farm – Need for Quality Cows

Healthy cows with good breeding history, produce more milk in one cycle and usually do not fall sick.  Such high quality cows, also deliver calves regularly.   The quality of milk in terms of FAT and SNF content is optimum.   This provides the owner, sustainability to operate when rates are low.

Such cows are rarely available in market for selling, thus it is advisable to develop such animals in-house.   To manage your dairy farm in sustainable way, you need to plan & execute your breeding strategy properly, maintain data & records as well as have patience.

2. How to use Fodder planning for Profitable Dairy Farm

Just as a tour operator plans for all the activities before organizing a trip to avoid to any inconvenience to travelers, you need to properly plan for raw materials, working capital and other capital & operational expenses in any business.

The main raw material in our business is green fodder and cattle feed. To get an approximate monthly expenditure on these raw materials you can see the graph below:

If you observe the graph carefully, it is clear that green fodder and cattle feed are the two items with maximum expenditure. It is essential to feed every cow and calf measured amount of water and fodder in a PowerGotha. In a PowerGotha an animal never remains hungry and the fodder is never wasted. By putting the folder in measured quantity, you can save lot of money. (To understand what is the actual expenditure in your cattle farm the PowerGotha online record book can really be useful. )

 

If you are spending a lot on fodder or green feed when the milk rates are low, it is actually a waste. Instead if you have a yearly plan for green fodder and feed ready, then you can avoid roaming around for greed feed in other parts of the year. The cost of inputs remains constant even when the rate of milk in the market is low. You can use this extra money for fodder and medicines.

 

Therefore, when green feed and money is available, you should store the green fodder and silage for the whole year in bags or pits. To read about the process of making silage please read the following articles:

 

Article 1- Silage Production 1

Article 2 – Silage Production 2

 

Important note – Never resort to reduce the expenditure on feed even if the milk rates are low.

 

To get good quality milk it is very important to give good quality feed product to the animals. To decide on how much expenditure on fodder is important for each animal, you have to know how much milk the cow is going to give. In short you need to know that the amount of water / fodder for each cow will be different. To decide which cow will be needing how much fodder, you need to conduct structured experiments. Providing proper quantity of fodder to animals is an investment in business.This will help you to survive in business at tough times.

 

#How to run Profitable Dairy Farm with Proper construction of the cattle shed                                    

 

If the cattle shed is constructed in a proper way, it is easier to calculate expenditure on each animal. To understand how to properly structure your cattle shed please read the following article:

Construction of cattle shed

 

3. Open, Clean and Dry Cattle shed

If you are a regular reader of PowerGotha you surely might be knowing about loose housing system. In a closed damp cattle shed the temperature in summers causes the animals to be uncomfortable and stressed. It results into lower than expected production of milk. Which results in turn lowers income. As the production remains same and rates are lower the farm owner needs to fight with economical adversities. Closed shade also results into frequent sickness in animals which causes higher expenditure on medicines and reduce production due to sickness which also adds to the losses of farm owner.

Animals in open farm are always healthy and happy. They relatively fall sick less number of times. Because of reduced activities like cleaning cow dung, cleaning animals, there is also a reduction in labor cost. We know that when the cow drinks for 4 -5 liters of water it approximately gives one liter of milk. In an open farm water is available 24*7. Because of all these factors, animals in open cattle shed give more milk as compared to the closed shed.

To know more about open cattle shed please click here.

4. Production of clean milk

What is clean milk?

• No adulteration of water or other substances
• Free from Aflatoxins
• Free from antibiotics for pesticides
• Low count of somatic cells
• Low bacterial count

How can production of clean milk help when the rate of milk is low?

As a lot of Milk Unions give better rate for clean milk, it is always advisable for PowerGotha to take efforts to reduce the losses by producing clean milk. If you are selling the milk on your own, quality helps to reduce the marketing costs.

A major reason among reduction in sales of milk & milk products is the fear of adulteration in the mind of customer. In today’s age of increasing diseases like cancer, people will always give preference to clean milk and the dairy farms which produce adulteration free milk will always be preferred by consumers and such farm will experience increase in income.

How to have clean milk production system in your Dairy farm ?

Following things can help

• Healthy and stress-free animals
• Loose housing farm or open cattle shed
• Improved milking procedure
  • Clean Utensils
  • Clean hands
  • Clean container (milking machine)
  • Clean dairy farm
  • Clean collection and distribution arrangements
  • Pre-dip and post dip milking

Advanced dairy farming – use of Milking Machine

There is a reduction in cost of labour due to use of milking machine. Use of quality milking machines makes the cow stress free and happy. Use of milking machine also results into reduces effect of cleanliness of workers.

Advanced Dairy Farming – Training of Labour

The finished product in your business is milk. From the time it leaves the cows body till the time it is collected by a milk processing center, it is completely handled by labour at your dairy farm.

These workers should understand the process and importance of clean milk. There is no other way to have clean milk without this.  Absence of owner at the farm may lead to casual attitude and ignorance by workers, which increases chances of reduction in quality of milk.

Therefore, if you want to produce clean milk it is very much essential to train your labour.  In our view, dairy farm owner along with all your workers should receive training of dairy farming together at least once.

5. How to run Profitable Dairy farm – Record Keeping and Planning

In the game of Cricket, if you know how much runs you need to score it is easier to play. Considering multiple factors like wicket, atmosphere, opponent the coach makes a proper strategy to win.

In a similar fashion, if you know how much profit you are earning when the rates were high and how much you are losing when the rates are low. You can strategize properly.  It will help you to be confident in adverse conditions by knowing:

• Where is the money being actually spent?
• How to save money on fodder and feed?
• Which cow eats how much feed and water?
• How much is being spent on medicines?
• Which animal is giving how much milk in a year?
• Should you sell animals which are frequently feeling sick?

If you know answers to all these questions perfectly, then even when the milk rates are low you would be confident & be prepared for adverse conditions.

To know these answers and to collect all these numbers use the PowerGotha Pashupalan Record book app.

6. Insurance

Insurance is preparing for some adverse condition to reduce the losses.

People living in snowy areas always store food before the winter season. It helps them to avoid relocation in condition of bad weather.  Stored food is kind of insurance against bad weather.

If you have made arrangement for insurance of your milk business in good times, you won’t have to worry when the times are not in your favour.   No, we are not talking about really having your dairy farm insured formally by General Insurance company.

Yes you can have your cows insured.

However, for other things – ensure that your business runs smoothly by taking following actions:

• Do all of the above things when the milk selling rates are low
• Ideal management of working capital and capital expenditure

When the business is making profit you should always save some money as capital for adverse conditions –

To understand about profit and loss measurement in your business read this article.

Self–distribution & Sales Management

It is always difficult to sell milk on your own rather than selling it to Milk Unions. For sale of milk on your own, following major factors need to be considered:

• Marketing the milk to the consumers
• Ensuring the delivery of the milk

Keeping in view all aspects, it is preferable to sell milk to Milk Unions.

We will soon publish a detailed article on sales and distribution system.

 

Your views/opinions/suggestions are welcome via Comments below.

 

P.S. 

At PowerGotha we recommend developing and producing Quality cows with high milk production in your own Dairy farm.

Such quality cows can only be developed using Quality semen, executing proper breeding policy and maintaining records of breeding in scientific way.

Manually doing this in a notebook, calendar, or on excel sheet, often is a cumbersome process  and prone to mistakes.

We have developed easy to use Android app to maintain all records of your Dairy farm online in Cloud.

Apart from Breeding Records, you can also get SMS alerts for Pregnancy Detection test, Drying off and delivery intimation from the app. 

If You haven’t donwloaded app yet you can do it from Following link.

PowerGotha Pashupalan Dairy Farming App

The app can be downloaded from here