Do you want to start a dairy farming business? If YES, here is a complete guide to starting a dairy farming business with NO money and no experience plus a sample dairy farming business plan template.
In the united states and in most countries of the world, you can successfully start your own dairy farm and grow the business to an international level by exporting your milk and cheese throughout the United States of America and other parts of the world.
Basically, dairy farming is a type of agriculture that caters to the long-term production of milk and cheese, which is processed (either on the farm or at a dairy plant, either of which may be called a dairy) for the eventual sale of the products.
A close study of the dairy farms industry shows that most dairy farms that have the capacity do not just concentrate in the commercial production of raw milk for households and businesses. They are involved in the production of fluid milk products, cheese, dry, condensed and evaporated milk, creamery butter and yogurt et al.
They go as far as establishing a standard milk and beef processing company in line with their core business. It is a means of maximizing profit and increasing source of revenue generation. Starting a dairy farm business comes with its own fair share of challenges, but that does not rule out the fact that it is indeed a profitable business venture.
An aspiring entrepreneur can either choose to start a dairy farm on a small scale or on a large scale depending on their financial status. If you are interested in starting a dairy farm business, then you should pay attention to this article.
Steps to Starting a Dairy Farming Business from Scratch
1. Understand the Industry
There are several business opportunities available in the agricultural industry and dairy farms are one of them. One good thing about the agriculture industry is that there is market for all the produce from the industry. Dairy farm is of course a thriving and profitable business because of the usefulness of beef and milk.
People eat beef, drink milk, and use fur and skin. With cattle milk, cheese can be made along with other dairy products. Companies in the dairy farms industry primarily raise cattle for milk.
Although this industry basically engages in the sale of raw milk and excludes the production of drinkable fluid milk and processed dairy products like butter, cheese and powdered milk, some dairy farms can still go ahead to accommodate other related business within the industry as long as they have the capacity to do so.
In recent times, the price of raw milk has been highly volatile, resulting to fluctuations in revenue for the dairy farms industry.
For example, in 2011, the price of milk bounced back from recession and pushed up by increasing global demand, resulting to appreciable growth in revenue generation. It was projected that in 2016, an oversupply of dairy products is expected to cause revenue to deep further in the industry.
However, despite all the volatility, the industry is expected to experience appreciable growth going forward. For the time being, the price of cattle feed, which typically makes up about half of the average dairy farm’s total expenses, has been nose diving as far back as 2014, significantly strengthening industry profit margins.
The dairy farms industry is indeed a large industry and pretty much active in countries such as United States of America, Israel, Argentine, Holland, Egypt, China, Germany, Turkey, Nigeria et al. There is no single dairy farm company that has dominate market share in the industry hence smaller dairy farms business can successfully make profits.
Statistics has it that in the United States of America alone, there are about 42,536 registered and licensed dairy farms business responsible for employing about 345,672 and the industry rakes in a whooping sum of $47 billion annually.The industry is projected to enjoy 1.3 percent annual growth.
As an aspiring entrepreneur who is looking towards leveraging on the agriculture industry to generate huge income, then one of your best bet is to start a dairy farms business. Dairy farms business is all about mass–breeding of cattle (cows, oxen, bulls, bullocks, steers, heifers,calf et al) for the sole aim of generating raw milk in commercial quantities and of course making profits.
Some of the factors that encourage entrepreneurs to start their own dairy farms could be that the business is easy to set up and they can easily get support from the government; you can actually start your own dairy farm in your compound if you live in rural community/farming community. All you need to do is to purchase the first set of cattle, purchase milking equipment and then build a safe fence.
Despite the fact that dairy farms have been in existence since time immemorial, that does not in any way make the industry to be over saturated; dairy farmers are exploring new technology to continue to improve raw milk production processes and also meat and milk preservation and packaging processes. The fact that there is always a ready market for raw milk and other dairy products makes the business ever green.
Just like any other business, if you are able to conduct your cost analysis, market research and feasibility studies before launching your dairy farm, then you are likely not going to struggle to sell your raw milk and other dairy products because there are loads of people out there who eat beef, drink milk and industries that make use of byproducts from cattle in manufacturing their products.
Over and above, there are few barriers to entry into the dairy farms industry. Usually, all inputs are readily available. In the nearest future, players in this industry may face the highest costs associated with accessing technology, especially in relation to genetic modification engineering in livestock breeding.
So also, intellectual property rights protecting new inventions and technology may mean that new entrepreneurs coming into the industry will need to pay license fees and this of course will cause increase in the start – up fee for starting a dairy farm cum cattle rearing business.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographics composition of those who consume milk and cheese and other products from dairy farms is not restricted to a group of people. Babies, adults and even pets drink milk hence the market for dairy farm produce is all encompassing.
So, if you are looking towards defining the demographics for your dairy farm produce business, then you should make it all encompassing. It should include households, dairy manufacturing companies, pet owners and businesses that rely on supply of fresh milk or cheese from dairy farms.
3. Decide Which Niche to Concentrate On
There is no niche area in the dairy farm industry, although a dairy farm can decide to specialize in either producing only cow milk, or goat milk or camel milk or they could generalize or concentrate in the commercial production of raw milk for households and businesses that are involved in the production of fluid milk products, cheese, dry, condensed and evaporated milk, creamery butter and yogurt et al.
So, if you are looking towards starting your own dairy farm, then you should clearly define your market so that you will be able to know how to get dairy farm produce to them.
The Level of Competition in the Industry
No matter the line of business you decide to pitch your tent, you are still going to compete with others who are into same area of business and dairy farms business is not an exemption.
The level of competition in the dairy farms industry to some extent depends largely on the location of the business and of course the capacity of your dairy farm.
If you can successfully create a unique niche for your dairy farm, you are likely going to experience little or no competition. For instance, if you are the only dairy farm in your location that is into the production of camel milk, you can successfully monopolize the market for a long time before you start having competition.
It is important to also state that the competition in the dairy farm industry depends on the scale of your dairy farms. There are dairy farms in the United States that are competing with global dairy farms and there are dairy farms in the United States that can only compete at local levels.
4. Know Your Major Competitors in the Industry
These are some of the leading dairy farms in the United States of America;
- Aurora Organic Dairy
- Chaseholm Farm Creamery
- Dairylea Cooperative Inc.
- Desert Farms – the first American company to retail camel milk commercially
- Foster Farms Dairy
- Joseph Gallo Farms – a large family-owned dairy operation that is prominent in California’s dairy industry; based in Livingston, California
- Maytag Dairy Farms – established in 1941 by Frederick Louis Maytag II and based in Newton, Iowa, it manufactures blue cheese and other cheeses
- Prairie Farms Dairy
- Smiling Hill Farm
- Surfing Goat Dairy
- G. Lee Dairy
- Tuscan Dairy Farms
- Waldrep Dairy Farm
- Organic Valley
- Meadow Gold Dairies
- Louis Trauth Dairy
- Gustafson’s Farm – a brand name of milk and dairy products sold in Florida
- Brewster Dairy
- Byrne Dairy
- Ardith Mae Farmstead Goat Cheese
When starting a dairy farm business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profit, grow the business and perhaps expand the business and start exporting processed meat and milk within your country and other countries of the world.
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 continue to review these key factors at regular interval while running your dairy farm business. As a dairy farm owner, you just have to have a proper grasp of your competitive landscape if indeed you want to 5. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, it will pay you to start from the scratch as against buying a franchise.
Besides, from available research conducted, there are no known fully operational dairy farms in the United States of America, that are into franchising. Most players in this line of business are adopting strategies that will help them sell their milk and meat beyond the city, state or country where their dairy farm in domiciled to other parts of the world as against selling franchise.
Besides, it is easier to start and run a dairy farm from scratch to profitability without leveraging on a known brand name. People will patronize your milk or cheese based on accessibility and pricing as against relying on a brand name.
Please note that most of the big and successful dairy farms and dairy production companies around started from the scratch and they were able to build a solid business brand.
It takes dedication, hard work and determination to achieve business success and of course you can build your own dairy farm to become a successful dairy farm in your area of specialization and even go ahead to start exporting milk and other dairy products to other countries of the world.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own dairy farm business today, one of the major challenge you are likely going to face is the presence of well–established dairy farms in your target market location. The only way to avoid this challenge is to create your own market; concentrate on households, individuals and also start–up production companies who need supply of fresh milk from a dairy farm.
Some other threats and challenges that you are likely going to face when you start your own dairy farm are global economic downturn that can impact negatively on household spending, bad weather cum natural disasters (draughts, epidemics), unfavorable government policies and the arrival of a competitor (a dairy farm or even cattle rearing farm that are also into production of raw milk) within same location.
There is hardly anything you can do as regards this threats and challenges other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Starting a dairy farm business is indeed a serious business so the legal entity you choose will go a long way to determine how big you want the business to grow. No doubt choosing a legal entity for a business can be a bit challenging.
When it comes to choosing a legal entity for your dairy farm you have the option of choosing from general partnership, a limited partnership, an LLC, a “C” corporation, or an “S” corporation. It is important to clearly state that these different forms of legal structures have their own advantages and disadvantages; which is why you must weigh your options properly before making your choice.
These are some of the factors you should consider before choosing a legal entity for your dairy farm business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to critically study the various legal entity to use for your dairy farm business, you will agree that a Limited Liability Company; an LLC is most suitable. You can start this type of business as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public and international.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your dairy farm business so as to compete with major players in the industry not just within the United States of America, but also on the global stage; you will be able to generate capital from venture capital firms, enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
8. Choose a Catchy Business Name
Generally, when it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Typically, it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own dairy farm business, here are some catchy names that you can choose from;
- Golden Era Dairy Farms Ltd
- Columbus Drake & Sons Dairy Farms, LLC
- Bay Town Community Dairy Farms, Inc.
- John Bosco Organic Dairy Farms Ltd.
- Captain L.P Dairy Farms, LLC.
- Camel and Cows Dairy Farms Ltd.
- Jose and Justin Dairy
- Dairy Star Farms, Inc.
- County Lake Dairy, Inc.
- Sally Milk & Cheese Farms, LLC.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the united states and in most countries of the world, you can’t operate a business without having some of the basic insurance that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your dairy farm business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own dairy farm business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Animal Mortality Insurance
- Farm Equipment and Auto Insurance
- Commercial Agribusiness Insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own dairy farm business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successful run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
11. Get the Necessary Professional Certification
Aside from the milk you produce from your dairy farm, professional certification is one of the main reasons why most dairy farms win contracts to supply raw milk to larger corporations that depend on supply of fresh milk from dairy farms, therefore you should work towards acquiring all the needed certifications in your area of specialization. You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business.
These are some of the certifications you can work towards achieving if you want to run your own dairy farm business;
- Organic Dairy Certification
- National Certificate in Dairy Farming (Artificial Insemination)
- Dairy Management Certificate Program
- Dairy Production Medicine (DPM) Certificate Program
- Certified Organic Milk Production
- The Dairy Farm Systems Consultant Certification
Please note that the average local dairy farmers in suburbs in the United States do not have certifications and that does not in any way stop them from growing their dairy farms.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own dairy farm business in the United States of America;
- Business and liability insurance
- Commercial Vehicle Operator’s Registration for distribution truck
- Food and drinks handler certificate
- Appropriate driver’s licenses for drivers
- Assistant’s licenses for assistants
- Health inspection Certificate
- Proof of ownership, proper identification and vehicle license
- Depot, commissary or service support facility meets vending unit operation needs
- Copy of license for the service support facility and/or a recent inspection report
- Tax Payer’s ID
- Fire certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Farm Partnership Agreement
- Operating Agreement for LLCs
- Insurance Policy
- Apostille (for those who intend operating beyond the United States of America)
13. Raise the Needed Startup Capital
Starting a standard and well – equipped dairy farm business can be capital intensive especially if you choose to launch a large dairy farm with the capacity to supply raw milk beyond your immediate community. Securing a large farm land, building well–secured cattle ranch with the right fencing, purchase of the first set of cattle and dairy milking equipment are part of what will consume a large chunk of your start–up capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business.
No doubt when it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for start–up capital for your dairy farm business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from government, donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
Starting a business such as dairy farm comes with its own challenges; it is a business that cannot be situated 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, Canada, the United Kingdom and Australia. The only location you can be allowed to start a dairy farm is a farm land designated for dairy farms.
15. Hire Employees for your Technical and Manpower Needs
When it comes to starting a standard dairy farm business, you will need the following equipment/machines; milking machine and milk collector, milk storage tanks and containers, water trough/channel, fencing, shovel and rake, and wheel barrow/cart.This equipment can be purchased as fairly used if you have low budget.
When it comes to choosing between renting and leasing a farm land for your dairy farms, the size of the dairy farm you want to own, and your entire budget for the business should influence your choice. If you have enough capital to run a pretty large and well–equipped dairy farm, then you should consider the option of long lease or out rightly purchasing the farm land; when you lease, or purchase a farm land, you will be able to work with long–term planning, structuring and expansion.
As regards the numbers of employees that you are expected to kick start the business with, you would need to consider your finance before making the decision. Averagely, 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 (you can occupy this position), 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 and Security Guards.
Over and above, you would need a minimum of 15 to 20 key staff members to effectively run a medium scale but standard dairy farm. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some job function. If you are just starting out you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with vet clinics around you.
The Service Delivery Process of the Business
When it comes to milk product from a dairy farm, the process is simple and straight forward, and as a matter of fact, a dairy farm can successfully run on auto–pilot with little or no supervision from the owner.
Basically, when the cattle (female) are matured enough to produce milk, then a specific period of the day is chosen (usually in the morning) where the cattle will be milked. Once the milk is collected, they are stored in a neat container or directly supplied to a customer as requested.
Some dairy farms with the capacity to run a standard business ensure that after they must have collected the required amount of milk for the day, they also engage in processing and production of fluid milk products, cheese, dry, condensed and evaporated milk, creamery butter, yogurt et al and then they are supplied to market or retailed from designated stores within the community.
16. Write a Marketing Plan Packed with ideas & Strategies
As a dairy farmer, you would have to prove that you have the capacity not only to manage a dairy farm, but also to supply fresh milk in commercial level on a consistent basis. So, if you have plans to start your own dairy farm, it will pay you to first build your capacity before sourcing to supply fresh milk to larger corporations who required fresh milk from dairy farms.
The fact that the entry barrier for starting a small scale dairy farm business is low means that there is bound to be more players in the industry no matter the location you choose to start yours. In essence, you must come up with creativity and innovations if you must carve out a market for yourself within the available market in your community, city, state or country.
So, when you are drafting your marketing plans and strategies for your dairy farm, make sure that you create a compelling personal and company’s profile. Aside from your qualifications and experience, it is important to clearly state in practical terms what you have been able to achieve in time past as it relates to dairy farm. This will help boost your chances in the market place when marketing your fresh milk and other dairy products.
Please note that in most cases, when you bid for supply of fresh milk from organizations who are in need of fresh milk, you will be called upon to defend your proposal, and so you must be pretty good with presentations.
Here are some of the platforms you can utilize to market your dairy farm and its produce;
- Introduce your business by sending introductory letters alongside your brochure to households, food processing and manufacturing companies that make use of fresh milk, corporate organizations and businesses in the United States (if you are just starting out, you may want to concentrate on start–ups and smaller businesses).
- Promptness in bidding for fresh milk supply contracts et al.
- Open your dairy farm with a party so as to capture the attention of residents who are your first targets
- Engage in roadshow in targeted communities from time to time to sell your products.
- Advertise your products in community based newspapers, local TV and radio stations.
- List your business and products on yellow pages ads (local directories).
- Leverage on the internet to promote your dairy farm.
- Engage in direct marketing and sales.
- Encourage the use of Word of mouth marketing (referrals).
- Leverage on the internet to promote your business (when you blog regularly on key issues as it relates to your business, people will consider you an expert in the field).
- Join local chambers of commerce around you with the main aim of networking and marketing your products; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing for you.
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a business that is profitable and last long.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your dairy farm;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your business
- Install your Bill Boards on strategic locations all around your city or state
- Engage in roadshow from time to time in targeted neighborhoods
- Distribute your fliers and handbills in target areas
- Contact corporate organizations and residents in your target areas by calling them up and informing them of your dairy farm and the dairy farm produce you sell
- List your dairy farms in local directories/yellow pages
- Advertise your dairy farms in your official website and employ strategies that will help you pull traffic to the site.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks are well branded with your company logo et al.