Dairy farming, though delicate, is among the most profitable
ventures one can engage in.
Experts opine that getting it right from the onset is a big step towards smiling to the bank.
Dairyverse Consulting dairy
production expert Samson Kiarie shared key insights on becoming a successful
dairy farmer.
What is the first
thing aspiring farmers must do before venturing into dairy farming and why?
The most important thing to consider is investment in dairy
production knowledge.
This will equip you
with the necessary skills to handle the main activities in farming that include
dairy products market (milk market), nutrition and feeding, cashflow management
and it’s cycles, dairy cow acquisition, human resource management,
infrastructure development and general farm management.
About finances, what
amount should one set aside to start dairy farming to get significant
returns?
A significant amount
of money is needed to run a herd of cattle for a year, assuming that your fixed
and variable costs will only be concentrates, mineral licks, cowshed construction,
purchase of the incalf heifers, veterinary costs, raising calves and zero
fodder purchases.
You need more patient capital to succeed in any investment to help you keep up with cashflow cycles.
The cash flow cycle measures how long a firm can recover the cash that it invests in ongoing operations.
Take an example of an intention to keep three dairy cows
each that cost Sh150,000 (in calf heifers). Assuming that you have land and
have planted fodder, the other costs will be the construction of the cowshed.
You will need to set aside labour expenses for about six
months and concentrates for a similar period (24 bags of dairy meal and 80kg
mineral licks) at a cost of roughly Sh100,000.
This is using a Kenyan concept that supports the argument
‘waanze kujilisha’ - for the herd/business to take care of its own expenses
from milk proceeds.
You will have mobilised Sh182,250 by the sixth month, having
sold about 4,050 litres of milk from the herd - assuming that the waiting
periods for the heifers to calf down were varied.
You will expect to realise up to a 35 per cent return on your
investment.
What kind of
challenges should an aspiring farmer expect in the early stages?
Based on our surveys, the main challenges revolve around
production management and include silent heat, low milk yield in some dairy
cows, poor body condition, and common transition cow challenges like reduced
appetite and milk fever - and all these challenges are preventable.
You should always vaccinate your herd.
Should one
incorporate a dairy specialist early, and if so, what key things should the
aspiring farmer pay attention to?
It is highly
recommended for one to work with a specialist in dairy production to
implement the project in the right way.
One should pay attention to getting it right in major areas that include nutrition of dairy cattle, health management and marketing of milk. You should look for a specialist with a proven track record to guide you through these.
Between buying a cow
ready for milking first and starting with a calf, what is the best way to go?
The best choice is to start with a cow that is ready for
milking, a heavily incalf heifer or a recent calver.
This will help you develop positivity in your cash flows.
That is the most important thing. A calf would give you a chance to learn
more about dairy farming, but practically, the risks involved are enormous: the
calf may fail to survive due to flimsy reasons, and it might take up to two years
before you can get a penny, making it hard to sustain the business.
You should incorporate calf rearing in later stages when the
farm is running optimally in preparation for a future herd.
While sourcing for the
first dairy cow or calf, where does the aspiring farmer start?
To get the right leads, one should look for dealers
in livestock sales.
In the majority of high
dairy producing zones, one will find dealers who pool cattle for sale since
farmers rarely sell their best-producing cows or calves.
A dealer in livestock sales who is registered with local
authorities.
In case of any dispute, one can be sure of amicable
resolution and never lose your money trading with any of their agents.
The cow should be free from any illness, with well-built
structure (dairyness of a cow) – wedgeshaped, udder attached high enough and
clearly separated into two equal portions by a strong suspensory ligament, have
strong teeth on the lower jaw, straight backline, alert with clear eyes and
healthy, have a good body condition and on the hind limbs the hock and the
pinbone should be on a straight line.
After sourcing, how
should one prepare the shed?
Surprisingly, you can provide a simple shed in an open field
where they will seek refuge on a hot day and at night.
You should, however, think of building a good cowshed when you
get enough resources.
How long does it take
to start recording returns after investment?
Through the example I had given earlier, rearing three cows,
the maximum net revenues you can generate in the first year will be Sh364,500.
This means you will need to give your investment a minimum
of two and-a-half years with proper capital structure and efficient management
to recoup your investment (break-even), by maximising your revenue streams from
milk sales, sales of incalf heifers, young bulls, sale of surplus fodder and
the expansion of the herd.
How can someone
working full-time juggle this with dairy farming?
You can conveniently run a dairy farming business while working
in a full-time role.
Provided that you have reliable labourers, sufficient
fodder, cows with the right qualities, proper record keeping, engaging a dairy
specialist, having a good milk marketing structure - preferably a cooperative
society and constantly investing in dairy production knowledge that can be
accessed online and through farm tours for benchmarking.
Any other insights?
I’d advise aspiring farmers to look for patient capital that will help them hold on to the
investment in the long haul for them to realise the full benefits.
Beware of the ups and downs when running a farm and keep
debt levels in the investment low.
When it comes to management of the lactation cycles, because
past 305 days into lactation, production significantly drops and the animal
should have been served by day 60 into lactation in order to have them dry for
2 months and then resume lactation.
This makes our returns on the investment fall between 25% and
35% per year, the monthly net revenues are approximately Sh30,000.
This means that you can’t afford credit that requires you to pay an installment that is more than Sh20,000 per month and take home Sh10,000. This caps your reliance on debt to a maximum of 25% of your total investment.
