Dairies | More and More Dairies Diversify to Survive

With the current economy producing low milk prices and consequently little to no income, more and more dairies are exploring options to add alternative profit sources to cushion their bottom line.

According to Marin Bozic, assistant professor in dairy foods marketing economics at the University of Minnesota, many traditional dairy farms, whose incomes were based almost exclusively on milk and meat, will expand to enterprises with a multitude of revenue streams.

“We already are seeing elements of this conversion on some farms, and innovation will allow more to follow,” he says.

We asked surveyors what avenues they are exploring to generate added profit to help with their farm’s overall profitability, and the results showed that branded beef and agritourism are leading the way. The results also illustrated that just 18% of respondents currently capture revenue from on-farm milk bottling, cheesemaking, or ice cream production. All told, a substantial portion of producers do plan to begin these activities, with a fourth of respondents’ sharing they are aiming to add branded beef in the coming years.

With super strong beef markets, it is no surprise that nearly 60% of respondents say they are currently breeding dairy cattle to beef. Diversification appears to be an essential ingredient to the modern dairy. Of all the respondents, only 20% designated their operation as dairy-only, while others described their operations by including growing crops and using beef for revenue.

Interestingly enough, dairies with beef-on-dairy operations are more likely than dairy-only operations to say they are planning to grow or expand in some way.

Jacob Larson of Larson Dairy in Florida, says as the next generation of Larsons return to the family’s 5,500-cow dairy, they’ll have to explore what makes economic sense.

“The level of return on investment in this industry is tough,” he says. “The next generation is going to need some clues as to whether this is a good return for the investment or not.”

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