What Is The Cost Of Starting A Dairy Farm?

Here are the average dairy farm startup costs.

The dairy industry is huge and accounts for billions of dollars in annual revenue.

It’s also a capital-intensive business that needs adequate financial provisions and preparedness.

How Much Does It Cost to Start a Dairy Farm?

Planning a dairy farm and opening one can be quite costly. Now a lot of readers might consider this a vague statement.

Readers might be interested in knowing just how much capital is sufficient for starting a dairy farm. As you’ll soon find out, there’s no straightforward answer to the question of startup costs.

However, you’ll find information on just cost implications and how much can be assessed by your scale of operation.

Figuring out the Cost of Dairy Farming is determined by Multiple Factors

As expected, every interested investor should investigate what it takes to be their operations.

Of crucial importance is the startup costs which might seem difficult on the surface especially when there are no clear strategies. First off, you’ll need to figure out the scale of your operation.

The scale of operations includes the number of dairy cows to buy for this purpose. A significant portion of your capital will be taken up by the purchase of dairy cows. What more?

Dairy farm equipment such as refrigerated milk storage tanks and a ready facility among others will be needed.

Equally important is the running cost of your dairy farm. Your cows need to be properly fed, vaccinated, and treated in the event of any health issues.

Your workforce and their wage bill should also be included in your considerations.

The Capital Requirements for Starting a Dairy Farm

How much capital is sufficient for starting a dairy farm? This will largely be determined by your scale of operation. How many dairy cows need to be purchased?

As a business, you’re looking at starting at a commercial level. This requires significant capital.

To find out how much it will cost to start your dairy farm, you’ll need to work out the costs. Does it sound more complicated? You only need to read on to have more clarity on startup costs.

In working out the cost, you’ll need to know how much each cattle costs.

Asides from the cost per head, having an idea of the amount of feed to be consumed per head gives a better insight into costs. Secondly, how large is the grazing area?

The size will mostly be determined by the number of cows to be purchased. Animal maintenance cost is another area of consideration.

Equipment required for your dairy farm will have to be itemized and their costs worked out. Working out a monthly operating cost is also an essential part of identifying the total capital requirement.

Licensing and insurance policy fees are other cost determinants to clarify.

  • Cost Per Cattle

As part of the process of cost estimation for a dairy farm, you need to first identify the cattle breed you wish to buy. Some of the best breeds include Friesians, Bunaji, Guernsey, Ayrshires, Brahman, Boran, Sahiwals, Jerseys, and Tregian.

Having settled on the cow breed, you’ll have to find out the cost per head.

The cost per head is multiplied by the number of cattle you wish to purchase. For instance, if a Friesian cow breed costs $15,000 per head, this is multiplied by the number of cattle.

For a 100 cattle, this will translate to $15,000 x 100 = $1,500,000.

  • Cost of Feed per Head

The $1,500,000 figure obtained only accounts for 100 Friesian cows. These cows will have to be sufficiently fed. So, you’ll need to work out the monthly cost of feeding per head.

If a single cow consumes about $300 worth of feed per month, this will be multiplied by 100 cows which translates to $300 x 100 = $30,000.

$30,000 x 12 months equals $360,000 per year in feed expenses alone. This is asides from other maintenance costs you’ll have to incur.

  • Cattle Maintenance Cost Per Head

Speaking of maintenance costs, diseases and pests affecting your dairy cows will have to be treated. This incurs additional costs. Part of the symptoms of these diseases includes an absence of appetite which translates to bad nutrition.

You’ll also have to deal with ecto and endo-parasites, as well as calf pneumonia, among many others. This could cause a couple of thousand dollars which adds to your overall costs

  • Payroll

A functional dairy farm will require a workforce. Even an automated farm will require some form of manual labor. As such, you’ll incur additional bills in the form of payroll.

These have to be carefully worked to make provisions for the provision and effective management of running costs.

A sufficient amount of startup capital is required to keep the business afloat until enough income starts coming in for the business to take care of itself.

  • Utility Bills

Unless you have your independent utility provisions, you’re going to incur costs in utilities. These include water and power or electricity.

Bigger dairy farms tend to consume or use more utilities than smaller farms. Hence, it’s logical to expect higher utility costs for larger dairy farms and vice versa.

  • Equipment

For your dairy farm to be successful, a wide range of equipment needs to be purchased. Some constructions will have to be put in place to make the farm conducive for your cows.

More importantly, this equipment helps bring about efficiency in how the business is being run.

You’ll have to itemize all the necessary equipment you need and to research or make inquiries about how much they cost. Such itemized method of cost assessment makes it much easier to keep track of your startup costs.

  • Licensing & Insurance

Licensing fees may apply in certain locations but may not be necessary for others. Also, insurance mostly covers the property or real estate on which the farm is being established.

Getting all the details on these will go a long way in helping you with better planning. More importantly, you’re able to have an idea of the cost for your particular situation.

Now you know what it will cost you to start a dairy farm.

There are many reasons why startup costs might differ from one dairy farm to the next.

These have been given above.