You need an estimate of $1.2 million to open a medium-scale dairy farm business/cattle ranch with the capacity to raise cattle such as; cows, oxen, bulls, bullocks, steers, heifers and calf and mass produce milk for the United States of America market. Note that this amount includes the salaries of all the staff for the first 3 months of operation.
When conducting costing and economic analysis for your dairy farm business, you just have to critically examine these key factors; place, product, pricing and promotion.
As a matter of fact, you would have to review these key factors at regular intervals while running your dairy farm business.
As a dairy farm owner, you just have to have proper grasp of your competitive landscape if indeed you want to United Kingdom and Australia can be said to be almost the same except for few variations.
For example, the cost of constructing a cattle ranch/dairy farm with the right fencing are same especially when benchmarked against the US Dollars.
Other factors that may be slightly different in terms of costing when it comes to starting a standard dairy farm business in any of the countries listed above are cost of labor, cost of cattle feed, cost of cattle medication, cost of transportation and logistics, local tax, insurance policies, business incorporation fee, promotion and branding cost, rent/leasing amongst other factors.
Over and above, when it comes to starting a medium scale dairy farm business, you should be prepared to either rent or lease a large farm land (cattle ranch) in a good and easy to access location; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.
Estimated Cost to Opening a Dairy Farm
These are the key expenses you are expected to make when starting a medium scale but standard dairy farm business in the United States of America;
- The cost for the purchase of cattle feed and cattle medication – $65,000.
- The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000.
- Other start-up expenses including stationery ($500), phone and utility (gas, sewer, water and electric) deposits ($6,500).
- The cost for construction of a standard cattle ranch/dairy farm facility with the right fencing – $300,000.
- The cost for leasing a large farm land – $200,000
- The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
- The cost for hiring business consultant (including writing business plan) – $2,500.
- Marketing promotion expenses for the grand opening of the dairy farm in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
- The total fee for registering the business in the United States of America – $750.
- The amount required for the purchase of the first set of cattle (cows, oxen, bulls, bullocks, steers, heifers and calf) – $150,000.
- The cost for acquiring the required working tools and equipment/machines (milking machine and milk collector, milk storage tank and container, water trough, rake, shovel, spade, wheel barrow, cart et al)– $150,000.
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750.
- The cost of purchase and installation of CCTVs – $5,000.
- The cost for building and hosting a website – $600.
- The cost for opening party – $8,000.
- Miscellaneous – $5,000.
You will need an estimate of one million, two hundred thousand dollars ($1.2 million) to successfully set up a medium scale but standard dairy farm business/cattle ranch in the United States of America with the capacity to raise cattle such as; cows, oxen, bulls, bullocks, steers, heifers and calf and mass produce milk for the United States of America market. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
Starting a small scale but standard dairy farm business with the capacity to raise minimal cattle and produce minimal milk at a community level in the United States of America will cost from ten thousand dollars to twenty five thousand Dollars ($10,000 to $25,000). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
When it comes to starting a standard and large scale dairy farm business in the United States of America with the capacity to raise cattle such as; cows, oxen, bulls, bullocks, steers, heifers and calf) and the capacity to mass produce milk both for the United States of America market and also to export milk to other nation plus a standard milk processing plant.
You should look towards budgeting well over three million dollars ($3 million). Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
Factors That Can Influence the Cost of Opening a Dairy Farm
1. Specific Location
Starting a business such as dairy farm comes with its own challenges; it is a business that cannot be started in any location of your choice. As a matter of fact, you will not be allowed to start a dairy farm in a residential estate in the United States of America. The only location you can be allowed to start a dairy farm business is a farm land designated for dairy farming.
2. The Size of the Land and Infrastructure
One of the major factors that can greatly impact the cost of opening a dairy farm, is the size of the land and infrastructure required for operating the dairy farm.
Come to think of it, the bigger the size of the land and infrastructure you settle for, the more you are expected to spend on lease or rent, or acquiring the land and infrastructure. Aside from the rent or lease, you will also be required to spend money on infrastructure such as barns, milking parlors, storage facilities, and fencing.
Trust me, the amount you are expected to spend on land and infrastructure will take a large chunk of the money you budgeted for opening the dairy farm.
3. Acquiring Cows and Other Dairy Livestock
Once you are able to sort out land and infrastructure issues, then a major area where you should look towards spending the bulk of your startup capital is in acquiring cows and other dairy livestock. Trust me, this is also a major factor that will influence the overall cost of starting a dairy farm.
Factors such as the number of cows, and other livestock you want to start the dairy farm with, the age, breed, and health of the cows, and other livestock will determine how much you will spend. As a matter of fact, in some cases, you may be required to import your animals.
4. The Cost of Feed, Nutrition, and Medication
Another factor that will influence the overall cost of starting a dairy farm is the money you will spend on livestock feed, nutrition, and of course medication.
The truth is that if you want your cow and other livestock to produce enough milk, you must be ready to feed them well and give them the needed medications. Hence, you should make a budget for hay, silage, grains, protein supplements, minerals, and vitamins.
5. Dairy Farm Equipment and Machinery
In order to start and operate a dairy farm, you must make plans to purchase dairy equipment and the needed machinery and this is indeed a major factor that can influence the overall cost of opening a dairy farm.
Trust me, the amount required to purchase dairy farming equipment and machinery such as milking machines, bulk tanks, tractors, loaders, barn cleaning equipment, and cooling systems are major costs and they are significant enough to influence the overall cost of starting a dairy farm.
Please note that the amount you are required to spend on dairy farming equipment and machinery will depend on the size of your dairy farm, and the type, and size of the equipment and machinery.
6. The Cost for Hiring Employees
Another major cost that can influence the overall cost of opening a dairy farm is the cost of hiring employees that will work on your dairy farm.
As a matter of fact, it will be impossible to operate a standard dairy farm alone, hence you will require some key staff members that will work in the farm. You will need hands to handle key areas such as herd management, milking, breeding, veterinary care, and farm maintenance.
With that in mind, you should have a budget for hiring your employees, training the employees, paying their salaries, and other employee benefits. In essence, the larger your dairy farm, the large the number of employees you are required to hire, and of course the more you are expected to spend.
Staff/Manpower Required
When it comes to starting a standard dairy farm business on a large scale, you would need the services of the following professionals;
- Chief Operating Officer
- General Farm Manager
- Veterinary Doctor (optional because it can be contracted)
- Human Resources and Admin Manager
- Accountant/Cashier
- Sales and Marketing Executive
- Field Employees
- Cleaners
- Security Guard
7. Regulatory Compliance Cost
As expected, if you are looking to start any business including opening a dairy farm, then you must be prepared to meet the required regulatory requirements and of course, obtain all the necessary permits and licenses. For example, in the United States of America, you will need environmental permits, milk handling, and processing licenses, and also your facility and operations must be in compliance with animal welfare standards.
Trust me, it doesn’t come cheap, and the amount you are expected to spend in this regard will influence the overall cost required for opening a dairy farm.
8. Marketing and Distribution of Your Milk and Other Dairy Products
Another major cost that can influence the overall cost of opening a dairy farm is the amount you are expected to spend on marketing and distribution of your milk and other dairy products from your dairy farm. The truth is that no entrepreneur starts a business without adequate plans for marketing their services or products.
For a dairy farm, you should be ready to spend on distribution, marketing, packaging, and branding your milk and other dairy products, and this can contribute to the overall cost of starting the dairy farm.
9. Miscellaneous Expenses
Lastly, aside from all the factors listed above, there are other factors that may be unique to each entrepreneur that can also influence the overall cost of starting their dairy farm. For that reason, we will classify such factors as miscellaneous expenses.
Miscellaneous expenses vary and they could cover expenses such as land mortgages, construction loans, equipment financing, working capital, interest rates, farm insurance, taxes, professional consulting fees, and unforeseen contingencies.
In conclusion,
It is important to note that all the factors listed above no doubt will influence the overall cost of opening a dairy farm, but an entrepreneur may decide to choose which of the factors listed above they can fit into their budget.
Interestingly, dairy farms come in different sizes and they have different production systems, ranging from small family-owned operations to large commercial enterprises. The one you settle for will determine how much you will spend.