Low milk prices and high input costs have prompted some dairy farmers to seek additional income opportunities.
For those considering on-farm dairy processing as an option, Cornell University hosted a webinar on May 25 to outline the potential of this strategy to improve profitability.
But like any business venture, product transformation is not a guaranteed win.
“Everyone comes to value-added dairy processing with hopes, dreams and excitement,” said Katelyn Walley-Stoll, agricultural business management specialist at Cornell Extension. “We don’t want to completely destroy those hopes and dreams, but we want to give you a strong dose of reality that there are a lot of risks involved.”
Underestimating the investments necessary for the success of a new business is one of the dangers.
“It takes a lot of time and a lot of money to get started,” Walley-Stoll said.
Much of that time will be spent on marketing, which can be unfamiliar territory for some dairy producers.
“One of the things about marketing is that a lot of farmers haven’t really had to do a lot of marketing, personally,” said Anika Gianforte, dairy processing specialist at Cornell Extension.
But if a farmer is serious about processing, product promotion is key to success.
Gianforte said the old adage that “if you build it, they will come” is a myth and simply producing dairy is not enough.
For marketing to contribute to profitability, Gianforte said farmers need to consider the four Ps – product, place, price and promotion.
Farmers must consider the ease of production of a product, the demand for that product, and any related regulations.
When it comes to “place,” Gianforte said the logistics of getting your product from point A to point B are important.
Farmers also need to consider how much they are willing to spend to produce the product and promote it to stores and consumers.
Along with all the marketing necessities, farmers need to produce a product that tastes good.
Cornell offers programs for basic and advanced food processing certificates, Gianforte said. But while the training is helpful, making a product that consumers love is the top priority.
“Getting the recipes right takes effort and knowledge,” Gianforte said.
Processors should also be aware of food safety regulations.
If you produce a safe and tasty product, marketing will be an easier task, Gianforte said.
So, is the risk worth the reward?
“Milk prices are really volatile,” Walley-Stoll said, “and to some extent by selling your own product you can set your own price.”
Integrating on-farm processing also opens the door to agritourism, adds another business venture to help transition to the next generation, increases community access to food, opens up new markets and, if it is done well, results in higher profits.
But before diving into on-farm processing, first commit to budgeting properly, getting the necessary training, and fully understanding the regulations.
Gianforte said there are resources to help with all of these steps.
Cornell will host a final on-farm dairy processing webinar on June 8. Sign up at bit.ly/OnFarmDairy.