Commercial aspects of goat farming simplified
Of late, there has been a tremendous interest in commercial goat farming amongst urban dwellers. There is no denying that it is a good business to be in given the uncertain and bleak scenario prevailing in the IT and Non-IT corporate sector. Just as there is considerable interest in commercial goat farming, there is an equal amount of information that confuses rather than enlighten potential entrepreneurs.
Without exception, all potential goat farming entrepreneurs want to start at a small scale and then gradually scale up. Nothing wrong in it except that small needs to be defined before taking the plunge. Even a small-scale operation has to necessarily offer some profits for the enterprise to succeed and grow. Any losses during the initial stages can destroy the aspirations of emerging entrepreneurs. Every successful businessman will tell you that commercial aspects take precedence over everything else in a business venture. Therefore it is prudent to first ascertain a level of operations that ensures that the farming enterprise is profitable from the word to go.
At the very outset, we need to realize that goat farming is a capital-intensive industry that offers an excellent return on investment, and the income generated is exempted from income tax. With a proper base plan, strategic positioning and tireless efforts, an enterprise involved in goat farming can not only generate excellent returns on investment in the short term but also offer exponential growth within 5 years of commencement of business.
The objective here is to let emerging, prospective and potential entrepreneurs know what it takes to get into commercial goat farming purely from a commercial point of view. The technical aspects of a commercial goat farm like farm location, housing, breed selection, healthcare facilities, fodder management, stock procurement, and logistics, etc. are secondary and can be obtained from the local agricultural officers, veterinarians, and equipment suppliers after the commercial aspects have been ascertained and addressed.
Based on our own experience and observations, we have prepared a chart that will help potential entrepreneurs understand the commercial aspects and financial implications involved in goat farming. The accompanying charts do not go into the minute details of establishing a goat farm since the intent here is only to offer a broad overview of goat farming as a business venture. Though these charts were prepared with an intent to offer an insight into the business of goat farming, they suffer from certain inadequacies as they do not dwell into the cost of land, cost of capital and opportunity cost since it varies from individual to individual and we have left it to the discretionary judgment of those setting up a goat farm project. In spite of these inadequacies, the charts will still be of help to understand the minimum scale of operations that gives the enterprise a reasonable chance of success.
Let us look at the other factors that influence the profitability of a goat farm: –
Land: The cost of land has not been included in the calculations primarily because some entrepreneurs may own the land themselves, some may buy it to start the farm on it and some may establish the farm on leased land and therefore putting a value on it may not necessarily reveal the correct picture. If it is leased land, then it comes at a cost since rental may have to be paid and that will have an impact on the return on investment. If it is already owned by the entrepreneur himself and it is being put to use now, then it is actually an additional benefit accruing to the land-owning entrepreneur. If the land is going to be acquired now to start a goat farm, the appreciation in land value is an additional benefit that accrues to the farming entrepreneur
Sales: We have indicated that you may realize a sale price of Rs 300/- per kilogram of live weight. This is pretty much the normal going rate. By avoiding middlemen and by selling meat instead of living goats, the farmer can expect to get rates as high as Rs 350/- per Kg. The impact this difference makes on the overall profitability of the enterprise is quite substantial. Modify the charts if you are able to obtain a better sale price for your goats.
Concentrated feed: We have considered 200 grams of concentrated feed per Buck per day in our calculations, 100 grams for mother goat during her pregnancy, and 200 grams during her lactating stage (The quantity is doubled to ensure that the goat kids get a very healthy upbringing). The goat kids can be fed 100 grams after they are weaned away from the mother.
The cost of procuring concentrated feed comes to Rs 30/- per Kg. Based on local conditions, there is some scope to modify these figures by altering the quantity, compensating it through grazing or growing it on the farm, etc.
Veterinarian’s services: If a farmer thinks that he is a good veterinary doctor himself, good luck to him since he may need lots of it. It is a safe and prudent practice to sign up for the committed services of a veterinary doctor to handle the healthcare of your stock. One additional benefit of engaging the services of a Veterinarian is with regard to insurance. You need the services of a veterinarian whenever you need to obtain insurance cover for your asset and also to make a claim on it.
Biggest positive: By retaining healthy alpha female goat kids for further expansion, the business can see exponential growth with minimal additional investments. Sales of goat milk and goat pellets are other sources of income that do make a small difference. Remember, the income that you earn is tax-free and the food business will never go out of vogue. Happy farming then.
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On Organic food and farming
The author is not a farmer but an entrepreneur involved in the business of farming.
Frequently asked questions
1. I don’t know anything about goats or goat farming. Will I be able to succeed in the goat farming business?
If you want to define yourself as a goat farmer in the initial stages, you won’t succeed. However, if you are looking at yourself as an entrepreneur in the business of goat farming, the future is very bright for you.
2. I would like to start small and then gradually scale up. What is the minimum investment required to start a small sized goat farm?
At the outset, we have to concede that a scale of operations that offers you a negative return on investment is not to be considered as a commercial goat farm. We consider goat farms with: –
- 100 mother goats as a Hobby-scale farm,
- 300 mother goats as a Micro-scale farm, and
- 500 mother goats as Small- scale farm.
Based on our own experience and observations, we had prepared a chart that contains the details like investment required, working capital needs, annual profits and return on investment etc. Please peruse the charts and use the calculations therein to assess the size that suits your circumstances best.
3. Where should I establish a goat farm?
From a technical point of view, any place which is higher than the surrounding area, land is fertile and has adequate groundwater availability should be perfect. From a commercial angle, if you were to buy land for more than 8 Lakhs per acre to set up a goat farm, it will become difficult to scale up and grow
4. How do I eliminate or reduce the risk in this business?
Loss of animal during grazing, death of an animal due to improper / inadequate veterinary care and epidemics are the primary risks involved in goat farming. You can reduce/eliminate risks by growing fodder inhouse, engaging a veterinarian on retainer basis and obtaining insurance cover for your animals. These steps entail additional costs but they largely safeguard your assets.
5. What are the services a veterinarian can provide to me if I sign him up?
- He has to inspect the farm at regular intervals for hygiene and animal health related issues and suggest remedies.
- Handle medical emergencies of animals whenever the need arises.
- Keep an eye on epidemics before they arrive on your farm.
- Issue valuation certificates for obtaining insurance policies.
- Carry out postmortem and issue death certificates whenever an insurance claim has to be made.
6. Can I send out the goats for grazing since that would be a more economical fodder than to grow fodder inhouse?
Of course you can but you have to take into account that an insurance claim can’t be made if an animal/animals go missing during grazing.
7. Is insurance cover a must?
If you want to be like Mukesh Ambani, then insurance is a must. If you wish to be like his younger brother, then insurance can be avoided
8. I am told that insurance companies don’t offer insurance policies for goats. You are suggesting the opposite. It is confusing. Please throw some light on it.
For your perusal, we have attached a copy of the insurance policy for goats. Click here
9. How much is the premium for insurance?
4% plus GST.
10. Which breed of goats is best for a commercial farm?
Every breed has its pros and cons in terms of growth rate, market value, adaptability to the farm conditions and resistance to diseases. There is no ‘One size fits all’ solution. As an entrepreneur, you have to evaluate the market and the local environment to decide which breed is most suited for your farm.
11. If the sale price of goats goes down, I will suffer losses. How to hedge on that risk?
You will find that the price of gold goes down sometimes, but have you ever seen the price of goat meat going down in the last 50 years? If you are not getting a good price for your goat, the problem is with your marketing skills rather than the goat.
12. Any other suggestion?
We would suggest that you seriously consider what we call it as forward integration. If you can supply goat meat directly to consumers instead of selling goats to middlemen or butchers, you will find your profits going up by another 30%. That should be your second aim after you have succeeded at goat farming.