How to Start a Dairy Farm & Secure Financing for It?

Starting a dairy farm in India is a rewarding venture that taps into the country's growing demand for milk and dairy products. However, it requires careful planning, significant investment, and proper management to ensure success. 

The dairy farming industry in India is among the largest in the world, but to thrive in this sector, it is important to have a structured approach to setting up and managing the business. Securing financing is also a critical part of this process to cover the costs of land, livestock, equipment, and operational expenses.

Starting a dairy farm involves several crucial steps that ensure the smooth functioning of the business. Here’s a step-by-step guide:

Step 1: Conduct Market Research

Before starting a dairy farm, it is important to assess the market demand for dairy products in your area. Understand the consumer preferences for milk, curd, butter, ghee, and other dairy products. Conducting market research will help you determine the scale and type of dairy farm you want to establish.

Step 2: Select the Right Breed

The success of your dairy farm depends heavily on the breed of cows or buffaloes you choose. You should research and select the breed that is best suited to your farm’s conditions, taking into account factors such as climate, milk yield, and disease resistance. Popular breeds in India include Holstein Friesian, Jersey, and Sahiwal.

Step 3: Choose the Location

Selecting the right location is crucial for your dairy farm's success. Ensure that the location is accessible, has a reliable water supply, and is near a market for selling your products. Additionally, the land should have good pasture for the cattle to graze on, and the climate should be conducive for dairy farming.

Step 4: Get the Right Equipment

You will need several pieces of equipment to run a dairy farm effectively. This includes milking machines, cooling tanks for milk storage, feed grinders, and farm vehicles for transportation. Proper equipment helps streamline operations and improves efficiency.

Step 5: Hire Skilled Labour

Dairy farming requires skilled labour for milking, feeding, maintaining hygiene, and animal health management. Hire experienced workers who understand the intricacies of managing dairy cattle and maintaining a clean, healthy environment.

Step 6: Create a Business Plan

A well-structured business plan is crucial to your farm’s success. Your plan should include detailed financial projections, a marketing strategy, an operational plan, and an analysis of the costs involved. A strong business plan is essential for securing financing from banks or financial institutions.

To operate a dairy farm legally in India, you need to obtain the necessary registrations and licenses:

FSSAI Registration

You need to register with the Food Safety and Standards Authority of India (FSSAI) to ensure compliance with health and safety regulations when producing and selling milk and other dairy products.

GST Registration

If your annual turnover exceeds the prescribed limit, GST registration is necessary. 

Animal Husbandry and Dairying Department Registration

Depending on your state, you may need to register your farm with the animal husbandry and dairying department for regulatory purposes.

Pollution Control Board Clearance

If your farm has a significant waste output, you may need to obtain clearance from the local pollution control board to ensure your farm adheres to environmental standards.

Starting a dairy farm can require significant capital investment. Financial planning is critical to understanding your costs and ensuring the long-term sustainability of the business. Securing financing will help cover expenses like purchasing livestock, setting up infrastructure, and buying equipment.

Uses of a Business Loan for Dairy Farm 

Here are the uses:

Purchase of Livestock

One of the major expenses in starting a dairy farm is purchasing high-quality cows or buffaloes. A business loan can help you cover this cost, allowing you to buy the right breed that will produce high-quality milk.

Farm Infrastructure

Building proper farm infrastructure such as sheds, storage facilities, and milking equipment requires a substantial investment. A loan can help fund these infrastructure needs.

Operational Costs

Running a dairy farm involves regular expenses like feed, veterinary care, and labour costs. A business loan can provide the necessary funds to ensure smooth operations.

Marketing and Distribution

Financing can also help cover marketing expenses to promote your dairy farm and products. Additionally, loans can be used to set up distribution networks and transport for milk delivery.

Disclaimer: The mentioned rates are subject to change at the lender’s discretion.

Check the following eligibility criteria you'll need to fulfil before applying for a business loan:

• Eligibility Criteria
  

  • Indian citizenship
    

  • Age between 21 and 60 years
    

  • 2+ years of business operation
    

  • Good credit score (650+)
    

• Documents Required
  

  • Proof of identity (Aadhaar, PAN)
    

  • Proof of business (GST registration, business licence)
    

  • Bank statements for 6 months
    

  • Financial statements (Balance sheet, profit & loss)

The application process for a business loan on Bajaj Markets is a simple, fast, and digital process. Have a look at the steps below that you can follow to apply online on Bajaj Markets:

• Step 1: Click the ‘CHECK ELIGIBILITY’ button available on this page
  

• Step 2: Complete the application form by entering your personal and business information
  

• Step 3: Choose from the available list of lenders
  

• Step 4: Specify your desired loan amount and repayment period
  

• Step 5: Submit the completed application form

Explore the various government schemes below that provide financial assistance to entrepreneurs:

PMEGP (Prime Minister’s Employment Generation Programme)

This scheme provides financial assistance to small and medium enterprises to generate employment. It offers subsidies for setting up new businesses, with a focus on rural and semi-urban areas.

MUDRA Loans

The Micro Units Development and Refinance Agency (MUDRA) scheme provides financial support to micro-entrepreneurs across various sectors. It offers loans under three categories: Shishu, Kishore, and Tarun, based on the business’s growth stage.

Kisan Credit Card (KCC)

KCC helps farmers access credit for short-term working capital needs. It simplifies the process of obtaining loans for farming activities and provides easy repayment options.

NABARD Schemes

NABARD supports rural businesses with financial assistance for development and rural entrepreneurship. It offers funding and subsidies to promote sustainable development.

Starting a dairy farm is a profitable business opportunity with proper planning, execution, and financing. Securing a business loan can provide the necessary capital to purchase livestock, build infrastructure, and cover operational expenses. Bajaj Markets offers access to various loan options that cater to the unique needs of dairy farmers, helping you take your business to the next level.