How to Start a Dairy Farm | Business Ideas

Dairy farming is a class of agriculture for long-term production of milk, which is processed (either on the farm or at a dairy plant, either of which may be called a dairy) for eventual sale of a dairy product. Dairy farms take a lot of money, and capital to start up, way more than a beef cow-calf operation does. Know what you're getting into and how you want to get into it before you decide to start a dairy farm. If you are not starting for the first time and instead are taking over a farm from your parents or grand parents, this article may be only a review for you. Dairy farming can be a lucrative and rewarding business, but determining the amount of capital required to start a dairy farm can be a daunting task. To calculate the cost of starting a dairy farm, document some basic information on a spreadsheet. Start by following some common steps.

Start a Dairy Farm Instruction:

Step 1

Create a business plan. This is especially important for those who are going at it the first time. See more details about this on How to Start a Farm. When you do start a dairy farm for the first time, make sure you plan out things like manure management, herd health practices, feed rations, breeding schedules for each cow,calving, human resources (as you may need to hire some people to help you), weaning, calf care, milking cows, harvesting crops, etc. All of these should be completed before you start on the next steps.

Step 2

Capital. If you are looking to buy a dairy farm that already has the capital (buildings, equipment, machinery) needed, then you only have to check to make sure it has adequate sterile facilities for storing and pasteurizing milk, barns for holding cows, corrals, areas of feed and manure storage, a milking parlor, and enough land to grow feed for your cows.

• If you are buying a piece of land that you need to build buildings on, then make sure you build silos, barns, manure holding lagoons or sloughs, corrals, stanchions for cows for milking (typically in the milk parlor) and area where it is easy to AI cows. You will also need a calving facility, and a facility where you can keep the calves you have to pull off the cows so they can be bottle fed and the cows go into milk production.

• Make sure the size of the buildings match the size of herd you are wishing to not start with, but have when you have reached your maximum dairy herd size.

Step 3

Find a company you can sell your milk to. You may also have to go through some paperwork sent out by the government too, among other things. In Canada, a quota of 100 cows has to be met in order to be qualified as a dairy farm. (Quota means minimum allowable amount of animals to start and to have in dairy production.)

Step 4

Get your cows. Holsteins may be your best breed to get as far as more milk production per day is concerned. Make sure they are healthy, good producers with good udders, free of disease, and docile. You may want to get Jerseys and/or Brown Swiss to add to the quality of the milk in addition to the quantity you have to make on a daily basis.

Step 5

Establish the total area of your dairy farm. Total area includes pasture land or grazing area, fields for growing crops, corrals for holding cattle in the winter seasons, buildings including barns, sheds and housing, and areas for storing feed and manure. This can be the most important step when you calculate the cost of starting a dairy farm because of how it affects your other costs. Virtually all of your other costs from machinery and capital to feed and veterinary care will be based off of the number of animals that you can house on the property.

• You will need to know your fixed, variable, operating, and depreciation costs. Fixed costs include rent; variable costs include fuel, feed, fertilizer, cattle prices for selling culls and bull calves, maintenance for machinery, etc.; operating costs include costs of feeding cows, milk production, veterinary bills, feed bills, etc.; depreciation costs include machinery, building, livestock, and equipment.

Step 6

Determine the number of dairy cattle that the grazing area can legally support. Many areas have local governmental guidelines that mandate the maximum number of hoofed animals that are allowed per acre of grazing land. Some countries like Canada also require a quota to be purchased before or during the start-up process.

• The cost per head (or per animal) will vary slightly (usually less than 10 percent) depending on the "line" or family history of the animals that you are considering purchasing. You can get a baseline value of dairy cattle in your areas by visiting the local livestock auction.

• Multiply the number of animals that you can house by the median sale price to arrive at the estimated cost of purchasing your dairy herd.

• Feed is one cost to consider. The amount of feed each animal will require is dependent on the climate and whether you are feeding straight grain, sweet feed, or a combination of grain and grass or hay. Your local feed supplier will be able to help you prepare a diet specific to your region and give you an estimated monthly price per head.

Step 7

Multiply the number of cattle that you can house by the basic individual monthly animal maintenance costs.

Step 8

Itemize the equipment that you will need to lease or purchase. Remember to include milking machines, sterilizing machines and milk storage tanks as well as computers and other office equipment.

• Veterinary care is another cost to consider. Most dairy farms utilize a combination of inoculations or vaccinations, hormone injections and supplements to maximize the milk production. You should also anticipate injuries and illness. Your local veterinarian will be able to supply you with the specific items required for your region and the cost per head of each item as well as a rough estimate of emergency care costs.

• If you live in a country where injecting hormones into dairy cows to increase production is outlawed (such as in Canada and the United Kingdom), this is one less thing to consider as far as veterinary care is concerned.

Step 9

Estimate your non-livestock monthly operating costs. Include your mortgage, utility bills, payroll, farm vehicles, etc.

Step 10

Check with your local government to find out if it has any licensing fees related to starting a dairy farm. 

Step 11

Request insurance quotes. You will need to cover your property (actual real estate), your animals, your equipment and your future profit or unexpected loss of income.

Tips

• Herd health is very important for dairy operations. Dairy cows can get sick quite easily, and are more prone to injury to their feet and udders than beef cows are, and are also prone to milk fever and ketosis after calving. In order to have a healthy dairy herd, stringent health practices must be in place.

• Expect your breeding/calving/weaning schedule to not be as defined as in beef cattle, but more-or-less all over the map.

• You will be calving 365 days of the year to keep a constant supply of milk being sold to producers.

• Dairy manure stinks. Don't let it accumulate in the barns, have a system where manure can be easily moved from the barn into the lagoons, to minimize the smell from the ammonia produced in the urine and feces.

• Dairy cows require higher quality feeds than beef cattle do, and consequentially eat more so they can meet their bodily demands so they can produce milk. A good feed ration is necessary for this.

• Make sure you have good practices to make your cows as comfortable as possible during the time you're milking them.

• Allow your calves to milk for at least a month to give them enough strength.

• Winter can be a hard time for cattle, make sure you have a barn or such building to keep them out of the wind in winter.

Warnings

• You may get errors in your calculations as you go along with your plan, so make sure you run-by the calculations again and again to see where you are going wrong and what you may be missing.

• Stay away from getting dairy bulls if you possibly can. They are very dangerous, more dangerous than beef bulls. That is why AI (artificial insemination) is a necessity for dairy operations, because it's not worth your life to have a dairy bull around. An AI tech is a good asset to have around to breed your cows for you.

• Don't go into this operation with only a few thousand bucks in your bank account. You might as well be raising beef cows than going dairy, as a dairy operation takes big bucks to start up.

• Don't go in to this operation thinking it's going to be a smooth ride. It's not. You are VERY busy from before sunrise to past sunset every day, doing everything from milking cows to red tape to fixing machinery. It helps to have trusty hired hands with you to help you through the slog of daily chores, but even with hired hands you may have to supervise them to see how they are doing and what they are doing.

Reference:

• How to Start a Dairy Farm