Introduction
Dairy farming is a class of agricultural, or animal husbandry enterprise, for long-term production of milk, usually from dairy cows but also from goats and sheep, which may be either processed on-site or transported to a dairy factory for processing and eventual retail sale. It is a lucrative business, which can fetch big profits due to the increasing and ready market for dairy products.
Production Capacity
The production capacity is based on the quality and number of animals raised on the farm. However, for 5 Friesian Cows, 100ltrs of milk will be produced as each Dairy Animal is capable of producing 20 Litres of milk per day.
Capital Investment Requirements and Equipment
This project will be operated locally on small scale, i.e. 5 Friesian Cows operated on 5 acres of land. The Fixed Capital Investment required to start this project is approximately US$ 73,521, generating a revenue potential of USD 374,400 per annum. The net profit margin is 6% with a payback period of 2 years.
Market Analysis
There is a high demand for dairy products in Urban Centers of Uganda especially in schools, hospitals, households, and Dairy processing industry. However, they may also be exported.
| Capital Investment Item | Units | Qty | @$ | Amount $ |
|---|---|---|---|---|
| Land | Acres | 5 | 12,000 | 60,000 |
| Cows | No. | 5 | 680 | 3,400 |
| Field Van | No. | 1 | 8,000 | 8,000 |
| Milk Cans | No. | 5 | 57 | 285 |
| Milk Filters | No. | 2 | 12 | 24 |
| Clamps | No. | 2 | 22 | 44 |
| Barns & Shelters | No. | 2 | 545 | 1,090 |
| Spraying Pump | No. | 1 | 30 | 30 |
| Injectors | No. | 2 | 10 | 20 |
| Spades & Pangas | No. | 4 | 3 | 12 |
| Weighing Scale | No. | 1 | 120 | 120 |
| Water Basins | No. | 5 | 12 | 60 |
| Harmer | No. | 1 | 5 | 5 |
| Wheel Barrows | No. | 2 | 35 | 70 |
| Hand Hoe & Rake | No. | 2 | 3 | 6 |
| Thermometer | No. | 1 | 12 | 12 |
| Milk Cups | No. | 5 | 6 | 30 |
| Water Tanks | No. | 2 | 125 | 250 |
| Feeding Troughs | No. | 5 | 12.5 | 62.5 |
| Total Amount | 73,521 |
| Labour | 300 | 3,600 |
|---|---|---|
| Repair & Maintenance | 200 | 2,400 |
| Ropes | 10 | 120 |
| Fuel | 400 | 4,800 |
| Depreciation(Asset write off) Expenses | 36 | 437 |
| Sub – total | 946 | 11,357 |
| Total Operating Costs | 12,692 | 152,303 |
Project product costs and Price structure in US$
| Item | Qty/day | Qty/yr | @$ | Pdn Cost/yr$ | UPx | Total /rev |
| Milk | 3000 | 936,000 | 0.16 | 152,303 | 0.4 | 374,400 |
Profitability Analysis table
| Profitability Item | Per day | Per Month | Per Year |
|---|---|---|---|
| Revenue | 1,200 | 31,200 | 374,400 |
| Less: Production & Operating Costs | 488 | 12,692 | 152,303 |
| Profit | 712 | 18,508 | 222,097 |
All raw materials and equipments are imported.
However, the business risk associated with it is a high potential of health and safety related risks surrounding the manufacturing and processing, perish ability of the products. But , this can be solved by employing food scientists and adhering to a strict safety regime.
Production and operation costs in US $
| Item | Units | @ | Qty/ day | Prod. Cost/ day | Prod. Cost/ month | Prod. Cost/Year |
| Direct Costs | ||||||
| Feeds | Kgs | 0.78 | 500 | 390 | 10,140 | 121,680 |
| Drugs | M/gs | 21.5 | 5 | 107.5 | 2,795 | 33,540 |
| Calcium/ Salt | Kgs | 0.6 | 10 | 6 | 156 | 1,872 |
| Water | Litres | 0.0028 | 600 | 1.68 | 43.7 | 524 |
| Sub total | 505.18 | 11,746 | 140,946 |
