If you’ve ever had the urge to return to “the good ol’ days”...
Then you might be considering starting a dairy farm.
I'm Ippei, a master of all things online business and local lead generation, and I'm here to help you with some sage advice on your farming journey...
Dairy farming is not a business endeavor for the faint of heart, and it is a skill set steeped in years of generational wisdom.
However, for the determined agricultural enthusiast and entrepreneur, starting a dairy farm might be the way to go!
Which is why I’ve spent many hours creating this nine step guide that will break down everything you need to be aware of before you start your dairy farm…
Including the startling initial investments, and potential roadblocks!
So let’s take a look.
How to Start a Dairy Farm Business in 2021
Considering a Dairy Farm Business in 2021? Here's What You Should Know:
There is a large opportunity for profit in the dairy industry. To get started, you will need to find land, invest in equipment, purchase a herd of dairy cows, and learn the tricks of the dairy farming trade from a mentor. Plus be prepared to seek financing for the startup costs!
Start Up Costs
While this list is not a comprehensive compilation of every you need to start a micro dairy farming business, it provides a snapshot of what you need to add into your business plan.
Average Total Startup Costs: $620,000 to over $1,000,000
Annual Profit/Take Home Pay of Established Dairy Business:
According to Zip Recruiter, the average annual revenue of this kind of business is: As of Feb 7, 2021, the average annual pay for a Dairy Farm Owner in the United States is $43,828 a year.
Source: https://www.ziprecruiter.com/Salaries/Dairy-Farm-Owner-Salary
Profit Margins of Established Dairy Farming Business
According to the Iowa State Extension, the average Profit margin of this kind of business is: 27.97%
Source:
https://www.extension.iastate.edu/dairyteam/files/page/files/ShowMetheMoneyBeg.pdf
9 Step Quick Start Checklist:
1. Know What You’re Signing Up For
Running your own dairy farm is a complex undertaking that goes far beyond the spectrum of running an average business.
A dairy farm, whether small or large, becomes its own miniature ecosystem…
And as the dairy farmer, you are responsible for running this ecosystem, and maintaining the health, structure, and systems of every aspect within your farm.
You will need to become proficient in the understanding of your cows’ health and nutrition, an expert in the world of bovine lactation cycles, and a pro at harvesting hay for peak nutrient density.
In addition to the learning curve…
Becoming a dairy farmer is extremely costly.
The startup costs to invest in land, purchase your dairy cows, and acquire the right equipment, are met with a shockingly low return on investment.
Farming of any kind is a challenging line of work…
And you will need to determine if you are built for it.
It’s not just a way to make a living…
It’s a way of life.
And this way of life is not for everyone.
So if this sounds like it's all a bit much for you...
Take a look at our lead generation coaching program for a viable business alternative.
However, on the flip side of things…
Starting a dairy farm can be an extremely rewarding business for those who are passionate about agriculture, livestock, and holistic living.
Just be honest with yourself about the commitment in front of you before diving in head first!
2. Find a Mentor
If you are entering into the world of agriculture and dairy farming, and there is one piece of advice that I could give you…
It would be to find a mentor.
Even if you grew up with some experience with farming or raising livestock…
There is something to be said for finding someone who has gone before you in your desired industry and gleaning from their wisdom.
Dairy farming isn’t just a job.
There are deeply ingrained instincts and procedures that come naturally to a seasoned dairy farmer.
These processes have often been passed down from generation to generation, and are so ingrained that words hardly do them justice.
Perhaps you live or are purchasing land in a rural area where there are other dairy farmers nearby:
These farmers are not your competition!
They are your lifeline.
Farming is more of a calling than a career, and leaning on the support, knowledge, and network of your local farmers will become invaluable.
Seek out someone who will be willing to guide you through the process of starting a dairy farm.
Having a mentor throughout this journey can be the difference between success and giving up during a hard season.
3. Commercial Dairy vs Micro Dairy
Starting a dairy farm is a capital intensive endeavor.
But understand that one of the biggest aspects of starting your farm will be how large you are wanting to go.
You have a choice between aiming for a commercial dairy farm, or a micro dairy farm.
Although it isn’t an exact science, the size of a micro dairy farm vs a commercial dairy farm are:
If owning 500 head of cattle sounds overwhelming to you…
Don’t panic!
Even small local dairy farms up to 30 head of cattle can be profitable!
And since each cow needs an average of 1.8 acres of land…
Purchasing 900 acres for 500 dairy cows could easily cost you upwards of a million dollars in land alone.
If you go the route of a micro dairy farm, you might find that your local community will be able to support your farm with ease!
Especially if you go the route of selling raw milk or even becoming a certified organic farming operation.
There is an increased desire to support local farmers and shop small in recent years, and you might be surprised at the demand within your local area for farm fresh milk and cheese!
For most people, starting at the micro dairy farm level is the only way that a business investment of such a significant size is even attainable.
4. Raw Milk vs Pasteurized
Another important decision that you will have to make is whether your dairy farm will sell pasteurized or raw milk.
To put it simply, pasteurization allows dairy farmers to distribute their milk to wider markets.
Which is primarily due to the pasteurization laws that apply to the majority of states and grocery store distributors.
Through heating milk through a standard pasteurization process, the risks of milk consumption are mitigated and disease-causing microorganisms are destroyed.
Although many people love raw milk due to its increased nutrition value and health benefits, the sale of raw milk is strictly regulated in most states for public health concerns.
The states with the most flexible allowance for the sale of raw milk in retail stores are:
If you are interested in selling raw milk from your micro dairy…
You will need to look into the local regulations that apply to your particular area.
Even within the states listed above, there are still strict rules that apply as to what kind of raw milk can be sold and what type of store it can be sold in..
For Example:
The sale of raw milk in a retail store is legal in the state of Oregon, but only raw goat and sheep’s milk, not cow milk.
5. Your Land
If you haven’t already guessed it…
One major cost to start a dairy farm is the expense of purchasing land.
For every dairy cow on your farm, you should have 1.5 - 2 acres of land.
These numbers also include young-stock, and not just your fully grown dairy cows!
So the size of your property and the acreage you have available per head of cattle will directly affect your potential to grow and scale your dairy farm.
Many people opt for purchasing their dairy cows and renting their land when first starting out.
This can take some weight off of the initial capital investment.
Land is a huge investment, and can be used to provide the majority of the feed that your dairy cows will require through growing hay.
But this is a huge commitment, and one that cannot be taken lightly.
Learning how to maintain land and produce and store crops is a massive undertaking.
Once you have acquired land through either renting or buying, you will need to start on the follow tasks to prepare your farm for livestock:
Responsibilities for Land:
If that last one surprised you, think about this:
As with most livestock… dairy cows produce large amounts of manure.
And while manure is technically considered waste…
If managed properly, it can actually be one of the biggest assets and greatest resources to your land and your cropping and feeding system.
Everything on your farm will tie together to create a healthy dairy farm ecosystem, and this includes the health of your land!
Which is why soil testing your pasture land is another important step to take once you’ve purchased your acreage.
Healthy soil is the key to a healthy pasture, and a healthy pasture is the key to healthy dairy cows…
And yes, healthy dairy cows equal lots of good fresh milk for you to sell!
Once you know what nutrients your soil might be lacking, you can adjust accordingly through natural fertilization like:
But applying fertilizer without first obtaining a soil test is like a guessing game.
6. Growing Hay
Ultimately, the health of your soil is crucial for the health of growing hay.
And when it comes to hay…
Dairy cows require a lot.
And not just a lot of hay in sheer volume!
But also in quality.
Dairy cows require some of the highest quality hay in order to produce delicious, high quality milk.
Primarily, they need a nutrient dense, high in sugar hay like Alfalfa.
Alfalfa hay is great for dairy cows due to its high amounts of:
A crop of healthy alfalfa hay can generally be harvested about three times per year…
And it is best to harvest the hay while it is still green but not yet flowering.
The different harvest of hay are called cuttings.
Your first cutting will generally produce the largest yield, and oftentimes be the most nutrient dense.
But if you are diligent and mindful, you can produce up to three high quality cuttings of hay with a reasonable yield for all three cuttings!
7. Purchasing Dairy Cows
When you are finally ready to purchase your first herd of dairy cows, you will need to take two things into consideration:
Breed is important because each breed of cow produces a different quality of milk, with different yield quantities.
In addition to the milk itself, each breed of cow will show its own unique traits and temperaments.
The top six breeds for dairy farming are:
Of all six of these breeds, Jersey cows have become some of the most common dairy cows in the United States due to their gentle temperaments and richest milk.
The reason that age matters is due to the fact that dairy cows do not calve and produce milk until around two years of age.
Until a cow reaches maturity, breeds, and gives birth to a calf they are called heifers.
Heifers will be much more affordable than an already bred dairy cow, but they will not yet be lactating.
Whether you start your dairy farm from the ground up, or purchase already lactating cows will be a big decision.
If you choose not to raise heifers into maturity, the best place to find producing dairy cows is to
purchase from another small dairy farm that is going out of business.
Although this can be hard to find, if you do stumble across this situation, it can not only save you money, but also ensure that you purchase healthy animals that simply need a new home.
A healthy dairy cow can produce 6-10 gallons of milk per day!
Which is way more than a single family can consume.
So even with only a small herd, you will be able to produce and sell plenty of milk.
The lactation cycles of a dairy cow are a complex science that you will need to become extremely familiar with as a dairy farmer.
Especially since you will need to have several groups of cows that are at different stages in their lactation cycles.
This is because every cow will go through a “dry period” of about 45-90 days in which she will produce no milk prior to the birth of another calf.
This dry period is extremely important for the health of a mother dairy cow because:
Importance of the "Dry Period":
But to give your dairy cows an adequate dry period without reducing your milk production, you will need to have one group of cows that are still lactating while the other group is dry.
8. Invest in Equipment
From a purely logical point of view…
The only equipment that is required for a micro dairy farming situation is a bucket and a stool!
But from a more practical perspective…
There is a lot of equipment that goes into any farming operation, and dairying farming is no exception.
Basic Equipment for Dairy Farm:
This list is just a taste of the equipment list that you will need to be prepared to invest in should you decide to start your own dairy farming operation.
Many farmers are now investing in robotic milking systems now!
These machines are expensive, but can completely change the efficiency of the way that your farm runs.
Especially if you need to cut down on labor costs as your business operations grow.
Currently, over 35,000 dairy farms now use robotic milkers.
RMS milking operations also increase milking efficiency and production.
But if you choose to milk by hand starting out, and later upgrade to a robotic milker, be sure to introduce the machinery to your cows gently.
Consider turning the machines on near the cows during milking time, but milking them by hand as per usual.
Once they get used to the sound, then you can begin to introduce them to the new process.
The last thing you need is to forcefully implement a new system that will stress out your poor dairy cows and throw off their milk production from shear stress!
9. Financing
If you haven’t caught onto it yet…
A dairy farm is not a small investment!
And most people don’t have sufficient startup capital just laying around to put towards getting their dairy business off the ground.
Which means that one of the most important aspects of creating successful dairy farming business will be obtaining sufficient financing from the beginning.
You may also have to work a traditional job alongside your farming responsibilities for the first several years.
The good news for new farmers is that there are a lot of financing and loan options available to help get you started!
In many ways, farming is a dying art in its own right...
So there are multiple programs and organizations out there that are willing and excited to invest in helping small farms get started.
According to this article by Investopedia, these are the best loan options available for farmers in 2021:
Source: https://www.investopedia.com/best-farm-loans-5092082Best Farm Loans of 2021:
Another option to consider is to take out a personal loan from a friend or family member that would be excited to invest in your business endeavor.
But if you choose to go this route, remember that borrowing money from friends and family can be risky…
And often has much greater consequences in the long run than a traditional financing option should it ruin your relationship!
Taking out a loan from a friend or family member should still be done with a legally binding contract in place that protects both parties…
And make sure that they get a reasonable return on their investment in your dairy farm, even if they are family!
Pros and Cons
of starting a dairy farming business
Pros
For many aspiring entrepreneurs, one of the greatest draws to launching a business is the freedom to set your own schedule. There’s no boss to dictate your day, or look over your shoulder… You are in control of your time. This can be both freeing, and stressful. But for most small business owners, it is one of the most gratifying aspects of being self employed.
Dairy farming is something of a lost art in the factory farming world that exists today, but it is a valuable trade skill. If you choose to start your own dairy farm, you will be taking part in keeping these valuable skills alive, and passing them down to the next generation of farmers.
The potential of a fully fledged dairy farm is really quite limitless. While you might start off with only 10-15 dairy cows… This can easily be scaled to hundreds of cows as your experience, and your customer base grows!
Cons
This is one aspect to dairy farming that not many people fully grasp the reality of. It is extremely expensive. Especially if you don’t already own land or basic farming equipment. We’re talking hundreds of thousands of dollars to launch a dairy farm. This isn’t a hobby farm situation to play around with.
You will be working from sunup to sundown at your dairy farm. There is always something that needs to be done on a farm, and it is hard work. Manual labor. And often messy. Quitting your 9-5 job to start a dairy farm will only result in you trading even more of your time for money. So while it can be rewarding work… It’s also exhausting.
Due to the extensive startup costs involved, and the time it takes to get a dairy farming operation up and running… You are looking at a hot minute before you start to see a return on your financial investment and hard work.
Finding a mentor in this industry is absolutely essential. Dairy farming is far more complex than it sounds. You will need to learn everything from the lactation cycles of your dairy cows, to the minutiae of how weather affects the quality of your hay harvest.
Dairy Farming Can Be Profitable, But You Should Know This First:
If there is one thing that can be said for dairy farmers…
It’s that they are an extremely committed group of people!
So what if you have the commitment…
But not the finances?
Starting even a micro dairy farming business requires extensive startup capital, and for this reason…
Many people shy away from a business in the agricultural industry.
But let me tell you a little story.
When I first decided to go into business for myself, I was barely making 2K per month at my old job.
After pursuing passive income and online business, I stumbled across a business model that now has me making well over 50K per month in only five years!
Why should this matter for you as an aspiring dairy farmer?
Well, just imagine what you could do with that kind of monthly passive income!
You could literally fund almost any business endeavor that your heart desires…
Including a micro dairy farm.
The secret sauce to my success?
Online lead generation.
The process of local lead generation relies on Google’s localization powers and strategic SEO to create a steady stream of new leads for small businesses…
So not only will you be able to make a pretty penny, but you’ll also be helping other business owners and entrepreneurs to grow!
Click here to learn more about how we can help you get started with local lead generation today!
