The dairy industry has been at the forefront of innovation in agriculture, managing everything from animal welfare to environmental stewardship. On-farm processing has gained a lot of traction over recent years to help farms meet their economic and business goals. A dairy processing center is not a simple addition to the farming operation. Below are some key questions that need to be answered before implementing a sustainable dairy foods system.
What is the market for our dairy product?
One of the first questions that should be explored is what market space is available for potential dairy products. Consumers are currently interested in purchasing products in which they can understand where the products came from. The interest from consumers bodes well for creating a local market. However, the right product from an infrastructure and distribution standpoint needs to be considered. Producers can either develop an on-farm store or sell through other distributors (restaurants or grocery stores). If selling on-farm, the main considerations should be whether the farm has enough space for the store and whether there is the potential to bring in enough customers to make the store sustainable. If selling through a distribution chain, transporting the product from point A to B must be considered.
What does the business model look like?
A dairy foods system should be run as a separate enterprise from the dairy farm. The processing facility should have its own cash flow and financial plans. Like on the farm, reviewing benchmarks is essential. Developing a business model will help determine whether goals are being met. Business models should also include changes in dairy supply in the short and long term. Will the farm have to continue selling their milk off farm in the short term, and will they produce enough milk to supply the processing facility in the long run? How will changes in milk production within the year impact supply?
What are the regulatory requirements?
Like other dairy processing plants, an on-farm processing facility will have both state and federal regulations. Producers should familiarize themselves with these regulations to determine the required facility and equipment requirements.
Deciding to implement an on-farm processing facility can be very exciting. However, the time and money to start can be quite demanding. Farms should consider reaching out to others that have had success with on-farm processing to figure out what has and hasn’t worked. Keep in mind, just like the dairy, what works for one farm doesn’t always work for the other.
