As we know that any business can be successful only in that condition, if there is profit from that business. Profit from any business can be gained only if earnings from that business are greater than expenses done to run that business. In the similar way a dairy farm can be only successful, if income from dairy farm is higher than the expenses to run that dairy farm. To find out profit or loss from dairy farm it is necessary that there must be knowledge of sources of income from dairy farm and types of expanses of dairy farm. Any business can be made profitable only by increasing the income sources and decreasing expenses, In case of dairy farming, reduction of expenses to run dairy farm are utmost important so there must be knowledge of type of expenses and how to reduce these expenses.
The total expenses to run dairy farm are broadly divided into two categories.
- Fixed Cost
- Variable Cost
To run a dairy farm first of all there is need of building, equipment required to run business and animals which are to be kept in dairy farm. In terms of cost with passage of time, there is deterioration of building, equipment as well as animals. So the total fixed cost is further subdivided into three components
- Depreciation of shed
- Depreciation of equipment
- Depreciation of animals
Although these are considered as fixed cost but the dairy farm where the depreciation of these items is higher due to improper use of equipment, lack of care of animals as well as lack of time to time maintenance of dairy sheds, the fixed cost increase than the permissible limit.
Variable Cost: Variable cost to run dairy farm is that category of cost which vary from time to time, season to season according to situation. The variable cost is further subdivided into 12 categories.
- Cost of green fodder
- Cost of concentrates
- Cost of silage/ straw
- Cost of feed supplements’ like mineral mixture/vitamins.
- Cost of labor
- Cost of death of animals and losses
- Cost of deworming of animals
- Cost of vaccination of animals
- Cost of tick control
- Cost of insemination of animals
- Cost of insurance of animals as well as dairy farm including building, equipment
- Loan Installment
It has been observed that about 60-70% of total variable cost is on feed and fodder of animals. This is one of the most important component and by managing the expenditure on feed of animals, we can contribute towards earnings from dairy business. The requirement of feed and fodder of animals is based on their body weight, stage of lactation, pregnancy etc. The requirement of feed and fodder to heifers and growing calves is different from adult animals. The requirement of feed to pregnant animals, lactating animals, lactating animals which are pregnant is different from each other. The requirement of feed to animals which are non-pregnant is less as compare to pregnant and lactating animals. So by calculating quantity of feed as per requirement of animals we can avoid excessive expenditure on feed of animals and other benefit of calculation of requirement of feed of animal is that when the required feed is given to animals as per their requirement , their milk production increases which lead to increase in profit from dairy farm.
The second important component where 20 to 30% of expenditure of total variable cost occur, is on labor which is required to handle the dairy farm. Here the contribution of the members of family in different activities of dairy farming can help to reduce the cost of labor. As dairy farming activities are not highly skilled, every `member of family can contribute in performing activities of dairy farm.
Third important component of expenditure in dairy farm is expenditure on maintenance of health of dairy animals. As deworming and vaccination of animals at regular interval is required to protect animals from contagious diseases and deworming for improvement of utilization of feed in body of animals which are taken by them. Ticks are one of the major problem of dairy animals as it causes dreadful disease in dairy animals leading to huge loss of dairy farmers. If the control of tick infestation is done in proper way and at regular interval it can avoid huge loss due to tick infestation and increase profit from dairy business. Insemination of animal at proper time is very important for its conception. If even one chance of insemination is missed it causes loss of at least 21 days. In other words animal will conceive at least late by 21 days resulting in delay in parturition of animals. So insemination of animal at proper time is very important and for this there must be knowledge at which stage animal should be inseminated. So insemination of animal at proper time can contribute in profit from dairy farming.
Another factor which affect the profit or loss from dairy farming business is the extent of loss from death of animals or infertility of animals in dairy farm. This factor is completely dependent on management of animals on dairy farm. If all the activities of dairy farming business are done in proper way at proper time, this can reduce the loss from death or infertility of animals at great extent.
Other expenses which contribute to variable cost of dairy farm are cost of insurance of animals, building and equipment used in dairy farm and repayment of loan installments which is taken from bank for running dairy farm. These expenses are fixed and cannot be reduced but by increasing the profit by reducing above discussed expenses we can do these expenses, as insurance of animals, building and equipment which is essential to avoid great loss due to death of animal or damage of building and equipment. Repayment of loan installments at regular interval at proper time prevent the excessive amount repayment in the mode of interest on loan taken to run business.
In the end it can be concluded that that there are two types of costs to run dairy farm — fixed cost and variable cost. To earn the profit from dairy farming business there should be efforts to do proper marketing of milk and milk products and to reduce the expenses to run dairy farm.
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