If you've got a farm, maybe you're considering starting a little dairy for some income. Or, perhaps, you want to go big and generate a lot of profit from your giant milking factory. However, if you have minimal knowledge of dairy farming, you should first know that it is costly. Dairy farming is more expensive and labor-intensive than farming cattle for their meat.
If you want to start a small dairy, you can start with at least 5 cows, preferably 10 or more. However, the more high-producing dairy cows in a dairy, the more feasible the operation. This is because the outlay of a dairy farm of any size is costly and affects the milk production cost.
Many dairy farmers started small and built their equity over time. But, it takes careful planning and research. This is because running a dairy farm is more scientific than a romantic notion. However, some farmers have found a balance between the two.
You Need Only A Few Cows To Start A Small Dairy
As a small-scale farmer, it is entirely possible to start a dairy with a small herd of 5 or 6 cows. The size of your herd will depend on your intended market and what type of dairy farming you plan to do. For example, do you want to supply milk to the whole state or just at a local market? Are you planning on running a dairy farm year-round, or do seasonal dairy farming?
Starting a dairy requires a lot of planning and even more financial outlay. It is an extreme science that shouldn't be lightly considered because so many variables are at play. For instance, you'll need to arrange the following and more if you plan on having a few dairy cows:
- A sterile, cold storage facility for the milk,
- A pasteurizing facility, if necessary,
- A milking parlor with stanchions,
- Water for the cows plus a system to keep their water troughs full,
- Food for the cows,
- Storage for their feed,
- Pastures and maybe an irrigation system,
- Dry and sunny housing for the cows that will protect them from extreme weather conditions,
- Separate housing for calves,
- Waste management and manure storage,
- Transport for the milk,
- Equipment and tools (e.g., tractors), and
- Storage for the equipment.
Given the financial outlay of the items listed above, having only one or two dairy cows wouldn't make good business sense. But you can start small and grow your herd over time to earn a profit.
Calculating How Many Cows You Need To Start A Dairy
Generally speaking, dairies with larger herds are more likely to run a profitable business. This is because larger dairies can negotiate lower prices when buying resources in bulk, e.g., food and medication. As such, the farmers' lower prices on milk production costs increase their profit.
The University of Minnesota revealed these statistics for dairy farms for 2019:
Dairy Farm Herd Size
Loss / Profit
40 to 60 cows
150 cows or more
300 to 600 cows or more
Table 1: Herd size vs. profitability of a dairy farm
However, these statistics shouldn't deter potential small-scale dairy farmers. If you have your heart set on starting a small dairy farm, there are ways to successfully operate one. It requires a lot of research, planning, and resourcefulness.
The Number Of Dairy Cows Will Depend On Their Production
To have a thriving dairy, farmers should consider having fewer cows with high milk production than more cows with lower milk production. This is because caring for a single dairy cow costs a lot of money. Ideally, you want to keep the overhead cost per unit low by having economical, high-producing cows.
Not all dairy cows have high production averages. The dairy cow breeds with the highest average production are Friesian, Ayrshire, Jersey, Guernsey, and their crosses.
Even so, each of these breeds differs in its average annual milk production. Therefore, to work out the production cost per unit of milk, you must divide the annual upkeep cost by annual milk production. When doing this, rather overestimate expenses and underestimate dairy production to allow for a more realistic production cost.
Having an idea of production costs will help you choose the best breed and number of cattle you can afford.
Research, Prepare A Business Plan, And Do A SWOT Analysis
You can gather information from local dairy farms, university agricultural extensions, and government institutions to see which are available in your area. The type of cows you choose should be able to thrive in your area and climate. Additionally, you should have enough space for them.
Depending on the grazing available, having at least 2 to 5 acres of land per cow is recommended.
It would help if you did a SWOT analysis for each aspect of your business plan. The acronym SWOT stands for:
- Opportunities, and
Below are more considerations for your research, business plan, and SWOT analysis.
- Is there a demand for the breed's milk in the local market?
- The fat content of the milk (for butter and cheese).
- Will you have a bull to cover the cows or artificially inseminate them?
- Will you buy calves?
- How much money and time is needed to raise a female calf to the milk-producing age?
- Is there a market for male calves, and what price do they fetch?
- How will you manage waste?
- Do you have a steady supply of clean water for your cows?
- What is the production cost per unit of milk?
- Will you hire laborers?
- Where will you obtain feed and medication for the cows?
- How big are your land and pasture?
- How much do you need to live after all the dairy farm bills have been paid?
- Will you qualify for a loan for your dairy farm?
- What are the local laws and permits surrounding farming with dairy cows?
Ways To Reduce Your Capital Investment When Starting A Dairy
A small-scale dairy farmer can minimize some of the considerable capital investment required to start a dairy farm. However, it requires being resourceful while not compromising the health of the dairy cows.
Below are some ways to enjoy dairy farming on a smaller scale while building up assets:
Build Equity Over Time, Starting With Cows
Since it costs a lot to set up a dairy, a potential dairy farmer can reduce the initial expenses and grow their equity. Many small dairy farmers start with their cows and rent the farm and land. Then, as the herd size grows, profits can be used to buy equipment, land, and other resources.
Share Resources And Responsibilities With Other Dairy Farmers
Dairy farmers often share their resources with one another as it makes practical sense. For instance, one farmer might be happy to share the use of his tractor in exchange for manure for his mushroom farm.
Additionally, many small homesteads share responsibilities. For example, they collaborate on a dairy farm project. In that case, the costs, labor, and profits can be split.
Be A Seasonal Dairy Farmer
Seasonal dairy farming is less intensive than year-round dairy farming and more natural for cows. Therefore, it is a great way to start a dairy with a small herd. While it does require financial planning for the "dry" winter months, seasonal dairy farming allows smaller dairy farms to save on major expenses.
For example, during the winter months when the cows are dry, they will not need the expensive nutrient-rich feed required for producing dairy. Cows milked seasonally have a longer lifespan, and their calves are more likely to thrive, growing your herd. Additionally, since they'll be grazing in pastures more, their manure will feed the soil and yield better crops later.
Starting a dairy requires more time and money than raising cattle for meat. However, if you like, you can start a small dairy farm with five or more cows and slowly grow your herd and equity over time. Alternatively, you can enjoy having a small dairy herd and selling their dairy or homemade dairy products as a side income.