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Home » From the Commissioner

Value Added Dairy Products

New Hampshire Department of Agriculture, Markets & Food (July 10, 2009)

milkWith depressed milk prices, several dairy producers have considered making value-added dairy products to capture a larger portion of the consumer dollar. However, when times are tough and money tight, it can be difficult to start up a new enterprise. Making dairy products isn’t without risk,and the capital investment can be very large. It isn’t uncommon to spend $100,000 to over $250,000 on a start-up operation.

The choices for value-added dairy are generally bottled milk, soft cheese, aged cheese, yogurt, ice cream or some other cultured drinks or spreads. Bottled milk can be the most fragile, as it has a short shelf-life and requires a quick turnover.

It may be a challenge to get product identity with some of the products, because there are many other commercial sources. There is nothing easy about making products; it requires a person dedicated specifically to it, rather than sharing a lot of time with crop work and animal management. People getting started in one of these ventures have told me it usually costs more than budgeted and takes longer to get started than planned.

When considering a value-added venture, here are a few steps to follow:

-Conduct a market study. One or two neighbors who say they’ll buy your milk aren’t enough. A market study can be as simple as using an interview sheet with several stores or buyers.

-Look at demographics. There are several websites that list income, age and population characteristics.

-Visit other operations. Other producers will often share their experiences.

-Experiment with products. There is a skill that goes along with specialty products, so get some training and try small-scale production.

-Write a business plan. A business plan forces you to think things through and provide a framework for pulling your data together. UNH Cooperative Extension can provide you with a template to get you started.

-Find resource people. Look for experienced consultants in the industry. UNH Cooperative Extension has some grant funding to help with procuring milk processing experts.

-Prepare a budget. As part of the business planning process, assemble a conservative budget with various price scenarios.

-Talk to family members. Hold family discussions and make sure everyone is committed to the project. Determine each person’s role.

-Research equipment. Talk to dealers and search the web to find sources of new and used equipment.

-Meet with the Public Health Department, Dairy Division. An early visit with public health officials may save you some mistakes down the line and ensure that things are being done according to code.

-Look at funding sources. Your banker will want to know what you are doing and may provide some capital.

-Investigate specialty grants and economic development loans.

-Don’t hesitate to call UNH Cooperative Extension to help you through the process.

-John C. Porter,University of New Hamsphire  Cooperative Extension Professor Dairy Specialist, Emeritus

(excerpted from New Hampshire Department of Agriculture Markets and Weekly Market Bulletin, July 8th, 2009)

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