| Dairy Industry: Poised for the big leap | |
Today, India is one of the world's largest and fastest growing markets for milk and milk products. Not only does it offer opportunities to domestic entrepreneurs and existing players, the time is ripe for MNC players abroad to transfer technology, sign joint ventures or use India as a sourcing center for regional exports. As expected, this growth comes with its riders. Success RequirementsThe question many producers are asking is - what must I do to stay competitive in the industry? Producers who are making a long-term commitment to the industry should be aware of the four major factors that can influence survival and profitability: |
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Production Efficiencies |
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Cost Control |
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Scale of Operation |
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Debt |
The secret for success is to strike the right balance, to maximize profits. |
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| Enhancing Profitability | |
Price: Milk revenue accounts for approximately 85% of the total revenue on most dairy farms. Milk and subsidy revenue/kg of quota can vary greatly from one farm to the next. Tighter profit margins plus high quota values will force producers to maximize returns from their quota holdings. Altering the protein/fat ratio can influence returns/kg of quota. Cost of Production (C.O.P.): Cost of production per liter of milk varies widely from plant to plant - the key lies in tracking the performance of each unit such as dairy, herd replacements and crops to ensure that total expenses less depreciation and interest payments, ideally should be less than 60% of revenue. |
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tighter profit margins |
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new technology |
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future of supply management and quota values |
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increasing demands on net farm income (particularly family living costs) |
To address these challenges, it is important to be a good money manager and use capital wisely, based on realistic cash flow projections. Producers who are willing to adapt to change have good reason to be optimistic about their future. |
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| Solution by Ramco OnDemand ERP | |
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