Calculating zakah of goat farm

Assalaamu alaykum. We are running a goat farm for milking, selling newborn kids, and for trading purposes also.

Milking and selling newborn kids: Currently, we have around 260+ goats that are producing milk and newborn kids. Most of the feed for these goats is purchased from outside.

- How should we pay zakah on the milk?

- How should we pay zakah on newborn kids? Usually, we sell the kids before they are a year old.

- To pay the zakat, should all the expenses, like workers' salaries, farm expenses, feed,... be deducted from the profit?

Trading Goats: Usually, we purchase the goat and sell it to the customer. Usually, we purchase and sell goats within one or two months. It is very rare that goats which remain with us for a year.

- How should we pay zakah on these trading goats? Some say that for every 40 goats, 1 should be given; for 120, 2; for 300 and above, for every 100, 1 goat.

Please advise.

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His slave and Messenger. 

The zakah on the goats that you own in this farm is calculated according to the rates of zakah on trade goods, as we have previously mentioned in fatwa 133630.

You should calculate the zakah as follows:

When a lunar year has passed from the time of having the capital with which you started this project, then you should estimate the monetary value of the old and young goats on the farm, the income from selling the old and young goats and their milk, and add to that the loans that are due to the farm (accounts receivable) if the debtors are solvent and they do not deny these loans, then deduct the debts due on the farm (accounts payable), including the worker fees, feed, water, medication, and any other farm expenses, and then pay the zakah on the remainder.

The monetary value of the farm does not include the equipment that is kept for use and is not for sale, such as equipment for watering the animals, a car for transporting them, or office furniture and appliances, if any exist.

As for the debts that are due to your farm while the debtor is insolvent, you do not pay zakah on them except after you receive them. Once you receive these debts, then according to the scholarly view adopted by Islamweb, you should pay zakah on them for all the past years.

With regard to the details on the zakah of goats which someone told you about, perhaps he was referring to the view held by some scholars, that if the Saa'imah (animals that freely graze in open fields for most part of the year) are kept for the purpose of trade, they are liable for zakah on livestock and not as trade goods after a lunar year has passed and they amounted to the due Nisaab (minimum amount on which zakah should be paid). The Hanbali scholar Ibn Qudaamah  may  Allaah  have  mercy  upon  him wrote:

If the person buys a number of Saa'imah animals exceeding the due Nisaab for the purpose of trade and a lunar year has passed and they are freely grazed and intended for trade, then they are liable for zakah as trade goods. This is the view of Abu Haneefah and Ath-Thawri. On the other hand, Maalik and Ash-Shaafi‘i, in the later Shaafi‘i school, held that they are liable for zakah of Saa'imah animals and not trade goods in this case because this view is stronger and because there is a scholarly consensus concerning the liability for zakah of Saa'imah animals and because this zakah is related to the wealth liable for zakah (Saa'imah animals); so it is given priority over the other view (being liable for zakah as trade goods). However, we believe that such Saa’imah animals reared for the purpose of trade should be subject to the same rates of zakah as trade goods because this is more beneficial to the poor as the payable amount would be greater...”  [Al-Mughni]

For more information, please, refer to fatwas 18856 and 49543.

Allah knows best.

*Helped by fatwas of islamweb.net