Starting a milk business in India is a great idea because the country is the world’s highest milk producer, contributing 24% to global production in 2021-22. Rajasthan (15.05%) is at the top and Uttar Pradesh (14.93%) is at the second position among the top milk-producing states.
The milk production in India has increased by 61% in the last eight years, reaching 221.1 million tonnes in 2021-22. Moreover, India’s export of dairy products has been significant as well, reaching 67,572.99 metric tons, valued at $284.65 million in 2022-23. This indicates a promising market for dairy product exports.
Considering these factors, starting a milk business in India can be profitable, given the high demand and substantial production levels. But as an aspirant, how much can you earn from the Milk Business. What will be cost of starting and how much profit will you secure in the end. In this article, we have it discussed in brief for you.
Why to Start a Milk Business?
Starting a milk business is a smart choice because milk is a crucial part of people’s daily routine worldwide, especially in India. Almost every household starts their day with milk. India has a high per capita milk consumption, with individuals consuming 427 grams per day, surpassing the global average of 322 grams in 2022.
In 2023, India topped the world by consuming over 87 million metric tons of cow milk, and the demand continues to rise. Even during the COVID-19 pandemic, milk businesses remained open as they are considered essential for human survival. This makes milk-related businesses resilient to economic downturns and failures.
The consistent demand for milk and dairy products, along with India’s high consumption rates, makes starting a milk business a reliable and recession-proof venture.
So, is Milk Business Profitable?
Yes, the milk business is highly profitable in India. Top brands like Amul are generating substantial annual turnovers, the brand alone reaching INR 52,000 crore in the 2020-21 fiscal year. These brands not only sell milk but also diversify into various profitable dairy products such as butter, cheese, and ice cream.
The profitability is evident from the longstanding success of these brands in the industry. The consistent demand for milk and its products, along with the established reputation of these brands, contributes to the lucrative nature of the milk business in India.
Let’s take a look at the top Milk Brands in India, and their turnover in year 2020 – 2021.
| Milk Brand | Product | Annual Turnover (2020-21) |
|---|---|---|
| Amul | Milk, Butter, Cheese, Ice Cream, and more | INR 52,000 crore |
| Mother Dairy | Milk, Butter, Cheese, Curd, and more | INR 11,000 crore |
| Aavin | Milk, Butter, Cheese, and more | INR 5,000 crore |
| Dudhsagar Dairy | Milk, Butter, Cheese, and more | INR 2,000 crore |
| Kwality | Milk, Butter, Cheese, and more | INR 1,000 crore |
| OMFED | Milk, Butter, Cheese, and more | INR 1,000 crore |
Beyond a doubt, Milk Business is highly profitable if done with the right planning. But as a milk start-up, how much can you expect from this business, next we have shared a brief analysis on it.
Milk Business Profit: How Much Can You Earn?
A dairy farmer in India managing 10 cows can earn around ₹87,000 per month. However, understanding the dynamics between income and expenses is vital for sustainable success in this sector.
While the selling price of milk and milk production largely contribute to earnings, managing costs, particularly feed and miscellaneous expenses, plays a crucial role.
In this exploration, we delve into the financial understanding of dairy milk business, breaking down the math behind profits and expenses for 10 cows. So, let’s start with how much can you earn per cow in milk business.
Daily Profit per Cow in Milk Business:
To calculate the Daily Profit, we will be using the formula = Selling Price per litre – Cattle Feed Cost per litre and multiplying with the daily production per cow.
Daily Profit per Cow = (Selling Price – Feed Cost) x Daily Milk Production per Cow
Given:
- Selling Price of Fresh Cow Milk = ₹42 per litre
- Average Feed Cost = ₹130 per day
- Daily Milk Production per Cow = 10 kg
So, Let’s calculate Daily Profit Per Cow = (₹42 – ₹130/10) x 10
= (₹42 – ₹13) x 10
= ₹290
Monthly Profit from 10 Cows in Milk Business:
Similarly, now, let’s calculate how much will you finally earn by the end of the month from the cow milk business.
Monthly Profit per Cow = Daily Profit per Cow x Number of Days in a Month
Monthly Profit from 10 Cows = Monthly Profit per Cow x 10
Assuming 30 days in a month:
Monthly Profit per Cow = ₹290 x 30
= ₹8,700
Monthly Profit from 10 Cows = ₹8,700 x 10
= ₹87,000
Milk Business Profit Margin:
Now, you might be wondering how much will i earn in percentage from the business. I mean, the milk business profit margin. So let’s calculate using the given formula.
Profit Margin (%) = (Net Monthly Profit/Total Monthly Revenue) × 100
Assuming the monthly revenue is solely from the sale of milk and is equal to the monthly profit from 10 cows (₹87,000), we can use this formula:
Profit Margin (%) = (₹38,000/₹87,000) × 100
Profit Margin (%)= 43.68%
Factors Influencing Profit in Milk Business
1. Cattle Feed Cost: The cost of cattle feed directly impacts profit. Exploring cost-effective and nutritious feed options can enhance profitability.
2. Milk Selling Price: The selling price of milk significantly affects earnings. Exploring markets and negotiating favourable prices can increase profit margins.
3. Milk Production and Quality: Maximizing milk production and maintaining high-quality standards can lead to increased revenue.
4. Feed Efficiency: Efficient utilization of greens or silage can reduce feed costs, thereby increasing overall profit.
How to Earn More Profit in Milk Business:
If you are considering to start a milk business, and looking forward to generate more income from the sector, here are some important considerations.
1. Increase Milk Production:
If daily milk production per cow increases, the overall monthly profit will also rise. Generally, a healthy Indian cow produces 10 litre – 15 litres of milk/a day. Whereas, a High-yielding cow can produce up to 60 litters of milk per day. Focusing on breeds with higher milk yield or implementing better breeding practices can contribute to this.
2. Reduce Feed Costs:
Finding cost-effective alternatives for cattle feed or growing greens/silage on the farm can significantly reduce daily expenses. For example – Instead of relying solely on commercial cattle feed, explore locally available and cost-effective alternatives. This could include agricultural by-products, crop residues, or locally sourced grains.
3. Improve Milk Quality:
Ensuring the cows produce milk with higher fat content can lead to premium pricing, increasing overall income. An alternative way is to improve milk quality by transitioning to A2 milk. A2 milk is produced by desi cows and known for its high quality, purity, freshness, and richness in vitamins, nutrients, and medicinal properties.
The milk is expensive due to limited quantities and the need for specific breeds. Cows producing this milk require breeding in open fields and careful genetic screening over approximately five years. Investment in breeding may be higher initially but pays off in the long run. In India, A2 Milk can be sold at Rs 90 per litre.
Read More: This Company Sells the Most Cars in India, Tata isn’t the no. 1
4. Explore Value-Added Products:
Diversifying into value-added dairy products, such as cheese or yogurt, can open new revenue streams and enhance profitability. Introducing value-added products broadens your product range, appealing to a wider customer base. Consumers seeking variety or specialty items may be attracted to these offerings.
Value-added products typically have higher profit margins compared to regular milk. The additional processing and packaging often justify a premium price, contributing to increased overall profitability. If there are fluctuations in raw milk demand, transforming excess milk into value-added products helps avoid wastage and maximizes resource utilization.
5. Market Research:
Conduct thorough market research to identify niche markets that may be willing to pay a premium for fresh or specialty milk. This could include organic, A2, or locally sourced milk. Example: Health-conscious consumers, urban areas with a focus on sustainable products, or regions with a demand for specialty dairy.
Analyse consumer preferences and trends in the dairy industry. This includes preferences for specific milk types (A2, organic), packaging, or production methods. Example: Some consumers may prioritize ethically sourced and sustainably produced milk, while other may want packed milk product so that they could store it for days or week, leading to potential market opportunities.
Final Words
These calculations provide a general overview of the milk business. So make sure the actual profits can vary based on various factors such as regional market conditions, farm management practices, and external economic factors. Regular monitoring, adaptation to market trends, and optimizing operational efficiency are key to sustained profitability in the dairy business. By regularly conducting market research and adapting your milk business strategies based on the findings, you can tap into lucrative niche markets, enhance your product offerings, and ultimately increase profits.
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