Best Checklist of key considerations in setting up a dairy farm in COVID Era 2020

Dairy farming is an exciting business; though not for the faint hearted. There are no bad days in dairy farming – as long as milk is there, there will be cash flows – sometimes insufficient. But as they say, everyday is a character building day.

A lot of things need to be calibrated everyday to make money – many of them not in farmer’s hands.

Given the changing landscape in the COVID era, we asked a group of progressive dairy farmers, dairy professionals, financial consultants, dairy technologists, dairy marketplace startup founders to create a checklist for new farms that addresses the changing landscape in the COVID/ Post COVID era.

Trends dominating dairy project under construction in 2020 COVID Era:

  • Uncertainty due to possibilities of future lockdowns.
  • Poor demand outlook due to shutdown of hotels etc. One may have to retail directly to find a strong market.
  • Uncertainty over a weakened economy.
  • Higher input costs due to changes in global supply chain dynamics.
  • Time overrun on projects due to lockdown with the possibility of missing breeding season.

MANPOWER

  • Work with local manpower – costs may be higher but risks from movement are significant.
  • Plan effective incentive schemes.
  • Use an effective attendance tracking solution, designed to work even in your absence due to #stayathome guidelines applicable to you. Attendance tracking solution should allow for peer review of attendance records.

LIQUIDITY

  • Renegotiate your costs and payment terms unless money has already exchanged hands. Save every penny.
  • Negotiate well. Pre covid era is over. Start with a basic milking pipeline setup and get a movable shed. Focus on cash flows. Vendors will lineup on your terms once you start operations. Stay smart. It is easy to invest money. But a zillion times more difficult to recover from profits. Let money remain in pocket.
  • There are many marketplace applications that help sell. Get the cash engine running as soon as possible by outsourcing deliveries.

FODDER

  • Best if fodder can be grown for own consumption. Overall improvement in margins will be around 10%. But it is a tough cookie to crack. And most new-gen urban farmers could focus on their marketing efforts instead.

INVENTORY AND REORDER LEVELS

  • Carefully examine inventory reorder levels and holding periods to ensure that stock-outs are avoided.

DEBT

  • Avoid bank funding by reducing project investment. If debt being taken, structure it well – balloon structure with first principal repayment at the end of 5 years.

USE TECHNOLOGY

  • Time remains a critical parameter — especially with work hour restrictions, limited delivery windows, increased distancing culture etc.

STAY INFORMED

  • Stay informed. Join farmer whatsapp groups. Join Cattlemen forum to articulate queries and concerns and to know what all is happening.

 

Leave a Reply