A dairy unit needs money twice: once to start (animals, shed, equipment) and then every month to run it, mostly for feed. Below is a worked example for 2 crossbred cows or 2 Murrah-type buffaloes, using NABARD's indicative costs for Tamil Nadu for 2026-27, with a simple way to work out your cost per litre of milk. It is an example to learn from, not a promise of profit. Your costs will differ.
One-time costs to start
Banks look at NABARD's indicative unit costs when they judge a loan. For 2026-27, NABARD's Tamil Nadu office puts a two-animal dairy unit at (NABARD, June 2026):
| Unit | Total | Without the shed |
|---|---|---|
| 2 crossbred (Jersey) cows | ₹2,07,000 | ₹1,62,000 |
| 2 graded Murrah buffaloes | ₹2,20,000 | ₹1,71,000 |
- The total covers the animals, transport, a simple shed, vessels and milk cans, the first year's insurance and one month's running costs.
- NABARD buys the second animal six months after the first, so that one of them is always in milk.
- Shed: 65 sq ft per cow including her calf (70 sq ft per buffalo), at ₹350 a sq ft for a simple shed or for repairing an old one: ₹45,500 for 2 cows and ₹49,000 for 2 buffaloes.
- Insurance: NABARD counts 5% of the animals' cost for a year's cover. See livestock insurance.
- Native cows: NABARD's Tamil Nadu figures for 2026-27 cover crossbred cows and Murrah-type buffaloes, not native cows. For native cows, your bank will use quotations.
Running costs every month
NABARD's unit includes one month of running costs for the 2 animals, the same for cows and buffaloes (NABARD):
| One month, 2 animals | Amount |
|---|---|
| Concentrate feed, at ₹27 a kg | ₹10,530 |
| Green fodder you grow | ₹2,500 |
| Dry fodder, at ₹6 a kg | ₹2,160 |
| Electricity and water | ₹100 |
| Vet care | ₹500 |
| Labour | ₹3,750 |
| Other costs | ₹1,000 |
| Total | ₹20,540 |
- Feed is the biggest cost. By our arithmetic, feed is ₹15,190 of that, about three-quarters. Official estimates put feed at about two-thirds to three-quarters of the running cost; NDDB says around 70% (NDDB). A 2017 ICAR study of farms in Coimbatore and Tiruppur found about two-thirds (ICAR study, 2017).
- Labour: NABARD counts ₹3,750 a month for 2 animals, and notes that the family may do the work. With family labour, the month costs about ₹16,790.
- Feed follows the milk: NDDB advises about 400 g of concentrate for every litre of milk from a cow, and 500 g from a buffalo, on top of a basic ration (NDDB). So the feed bill rises and falls with the milk.
- Bank planning figures: the State Level Bankers' Committee's 2026-27 book prices concentrate at ₹35 a kg and dry fodder at ₹7 a kg, and allows Kisan Credit Card working capital of ₹20,000 a cow a year (SLBC Tamil Nadu). The NABARD and SLBC books use different feed prices, so price your own feed locally.
- NABARD's unit holds only one month of running costs; more can come through a Kisan Credit Card.
Income: what you can sell
Milk is the main income. The calves you do not keep, and the dung, add a little more.
- Milk money = litres you pour × days × your rate. ₹44 a litre is the price announced on 31 August 2026 for standard milk (TN government, 31 August 2026). Your own rate depends on the fat and SNF of your milk: see milk price.
- Plan with the year's average, not the peak. Milk rises to a peak in the weeks after calving and then falls, and a buffalo is dry for 2–3 months before her next calf (TNAU); a cow, for about 2 months (NDDB). So plan with your herd's average litres a day over the whole year.
- Calves: heifers and calves you do not keep can be sold; see selling animals. The box below shows asking prices in farmers' cow ads on Kattutharai.
- Dung: use it on your own fields, or post a free ad to sell it.
- Society bonus: some societies share a bonus at Deepavali or Pongal; do not count on it in your plan.
On Kattutharai, 1 Nov 2026
Asking prices in farmers’ ads, not market prices.
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Will the milk cover the costs?
Before you buy, work out your cost per litre: divide your running costs for a month by the litres you expect to pour in a month. Then compare it with what your society pays for milk like yours.
| Both animals: average litres a day over the year | Litres a month | Cost a litre, hired labour (₹20,540 a month) | Cost a litre, family labour (₹16,790 a month) |
|---|---|---|---|
| 10 | about 300 | about ₹68 | about ₹56 |
| 15 | about 450 | about ₹46 | about ₹37 |
| 20 | about 600 | about ₹34 | about ₹28 |
- This is our arithmetic, with NABARD's monthly cost and 30 days to a month. It keeps the feed bill fixed, but concentrate is fed by the milk, so animals that give less milk also need less concentrate. Work out your own feed bill with your own yields and local prices.
- Compare each figure with your own rate from the society. The price announced on 31 August 2026 is ₹44 a litre for standard milk (milk price).
- Then add the loan. For example, if you borrow ₹1,50,000 and repay it over 5 years, the principal alone is ₹2,500 a month, plus interest: about ₹6 more on every litre if you pour 450 litres a month.
If your cost per litre is above what your society pays, change the plan before you spend: grow more fodder, use family labour, choose animals that suit your feed, or start later.
Make your own budget
- Write down what you already have: fodder land, water, a shed, and family members who can work.
- Get local prices for the animals, shed materials, concentrate and dry fodder.
- Plan the milk honestly: your herd's average over the year, not the best month.
- Add the running costs month by month, including the dry season, when you buy more fodder.
- Keep money, or a Kisan Credit Card, for feed until the first milk payments come in.
- Divide, compare with your society's rate chart, and then decide.
What changes the numbers
- Feed prices: NABARD prices concentrate at ₹27 a kg and SLBC at ₹35; ask your local suppliers.
- Your own green fodder: NABARD counts green fodder you grow, at 4 animals to an acre; TNAU plans about 1 acre for 2 cows (TNAU). Without water for fodder all year, you need more land. See Dairy cow feeding: fodder, concentrate, minerals and water.
- Who does the work: hired labour is ₹3,750 a month for 2 animals in NABARD's figures.
- Milk, fat and SNF: more litres, and richer milk, earn more.
- A calf on time: a cow that does not conceive on time stays dry longer and still eats. See Cow and buffalo breeding: heat signs, AI and calving.
- Disease and deaths: vaccination and insurance protect your money. See Cow and buffalo health: vaccine calendar and warning signs and insurance.
- The shed: NABARD costs a simple shed at ₹350 a sq ft and a pucca shed with a concrete floor at ₹550.
Common mistakes
- Planning with the best month's milk instead of the year's average.
- Forgetting the months when a cow is dry but still eats.
- Buying animals before your fodder is growing.
- Counting on a bonus or a price rise.
- Spending everything on the animals and the shed, and keeping nothing for feed.
Frequently asked questions
How much money do I need to start with 2 cows?
In NABARD's 2026-27 Tamil Nadu figures, 2 crossbred cows come to about ₹2,07,000, including a simple shed and one month's running costs, or ₹1,62,000 if you already have a shed. For 2 Murrah buffaloes it is about ₹2,20,000. Your bank will use quotations.
Is dairy farming profitable?
It can be, but nobody can promise it. It depends on your milk, your feed costs, your labour and the rate you get. Do the break-even check with your own numbers before you buy.
What is the biggest running cost?
Feed: about two-thirds to three-quarters of the running cost in official estimates. Growing your own green fodder helps cut it.
Will the bank ask for collateral?
For farm loans up to ₹2 lakh, RBI has told banks not to ask for collateral (RBI). See Dairy farming loans, insurance and schemes in 2026.
Next
Read Dairy farming loans, insurance and schemes in 2026 for the Kisan Credit Card, loans and insurance, and Selling milk: milk society, price and FSSAI rules for how your milk is priced. To see animals near you, browse cows for sale and buffaloes for sale.