No farm would be a dairy farm without a milking parlor, which is why they are one of the biggest financial slices of a dairy farmer’s initial investment. The cost isn’t just a one-off amount either, since there are also operational costs to consider. But how much should an aspiring dairy farmer prepare to spend on setting up their milking parlor? How much does a milking parlor cost?
Building and equipping a new milking parlor on a dairy farm could range in price from approximately $150,000 to over a million dollars. The cost depends on the farm’s size, the number of cattle, and how technologically advanced the farm will be. You can save money through retrofitting, though.
The type and size of your milking parlor will determine much of the cost, along with the technology you use and countless other factors. But it’s easy to get an idea of the overall cost so that you can work that into your planning. Let’s consider all the aspects, then calculate approximately how much a milking parlor would cost.
What Determines The Cost Of A Milking Parlor?
There are five steps to determining the cost of a milking parlor. You must consider all five steps carefully because you can quickly mess up your entire budget if you miscalculate even one aspect.
Step 1: Determine The Milking Parlor’s Size
The size of the milking parlor will determine many things, not least of which is the quantities of various building materials you need. It will also decide whether you will have to get a construction company and professional fitment or if it’s something you can do yourself with the help of a few laborers, which could shave quite a few dollars off the total cost.
The size of the milking parlor will mostly depend on the number of cows you have because the parlor should be large enough to handle the cows comfortably and all the machinery and still leave space for your workers.
Having everything cramped into a small space will make it an unpleasant working environment for your workers, not to mention causing significant discomfort for the cows. You will also have to spend more on cooling equipment since heat builds up much more rapidly in tight spaces, and heat-stressed cows produce less milk.
Step 2: How Technologically Advanced Do You Want It To Be?
There are two extremes to this aspect. The option with the lowest initial investment would be a low-tech milking parlor, where you and your workers milk the cows by hand and handle everything manually. It has a low startup cost but will cost you more in the long run, both in time and labor expenses.
The other extreme is to automate everything, which could even include getting automatic cleaning robots. The initial investment would be extreme, especially for a startup, but larger farms can benefit greatly from this approach as it will save a fortune over the long term.
Step 3: Estimate The Cost Of The Materials
Now that you have an idea of the size of the milking parlor and how high-tech you want it to be, you can start estimating how much the materials will cost. You must include the following in your estimations:
- Cost of building materials.
- The milking equipment.
- Cooling facilities.
- Storage facilities.
- Laboratory equipment to test and pasteurize the milk, etc.
- Other technologies you wish to add, like cleaning and maintenance equipment.
- Any other necessary components, depending on what you want to include in the parlor.
The cost estimation will depend on the decisions you made in steps one and two, but you also have to consider the quality of the materials and equipment you wish to buy. You can buy cheap equipment, which will save you a lot in the initial investment but could cost you more in maintenance and loss of productivity later on.
Step 4: Determine The Cost Of Labor
There are two sides to this. The first is the initial labor force you need to get the milking parlor built and set up correctly. It will probably cost more if you’re planning to get contractors to do this, but it will also save you plenty of frustration.
The other labor calculation deals with the running costs, which you should also consider since the profitability of your milking parlor has to repay the initial investment that you are putting in now. Therefore, higher running costs will have a detrimental effect on that.
Step 5: Calculate The Total Cost
Once you’ve determined all those aspects, you can add them to determine the total cost of your milking parlor. You should have two totals: capital expenses (the initial amount you must pay to get it built and set up) and operational expenses (how much you must spend on operating and running the milking parlor efficiently). They are equally important, so don’t neglect either of them.
Calculating The Cost Of A Milking Parlor
Now that we have an idea of the basics, let’s calculate the cost of a milking parlor based on all aspects.
The Size Of The Building
You can calculate a reasonable estimate for the size of a milking parlor by two factors: the type of milking parlor and the number of cows that will be in the parlor at a time.
Here’s a good baseline to work from, with a safe estimate of $150 per square foot, which is in line with average construction costs in the United States:
Number Of Cows / Stalls
Total Size Of Milking Parlor
Construction Cost @ $150 per square foot
On average, the cost to build a milking parlor that can accommodate 50 cows at a time would look as follows:
- Rotary parlor: $280,000 to $550,000, including site preparation.
- Double parallel parlor: $220,000 to $450,000, including site preparation.
The Cost Of The Equipment
Some milk parlors have more equipment than others; it depends on the size of the dairy farm and what parts of the dairy production process occur in the parlor. You can also decide how state-of-the-art you want to go in terms of technology and optional equipment.
The first consideration is the livestock stalls or chutes. Depending on the layout and how advanced you want to make it, a single chute could cost anywhere between $600 and $2,500. You have to multiply that by the number of cows that you will have in your milking parlor at any given time to get an accurate estimate.
The second aspect is the milking machine. Small farms with less than ten cows (or even slightly more) can easily milk them by hand, making it unnecessary to spend more money on a machine. Even a mobile milking machine will be sufficient for these farms.
Serious dairy farms will need a proper, dedicated milking machine in their parlors. A farm with 50 cows will do well with a low-line milking system which includes some milk meters, cooling equipment, and a plate cooler. This ranges in price from approximately $25,000 to $35,000, depending on your chosen quality.
Larger dairy farms will need a more industrial-level milking robot. These are expensive but are usually fast and efficient. They can milk more than 70 cows at once, but their prices range between $150,000 and $200,000, which is a once-off initial capital investment.
The general rule of thumb is that milking machines cost approximately $2,500 per milking unit. So, if you are milking 20 cows simultaneously, you can estimate the cost of the milking machine to be around $50,000.
Some milking machines come with storage tanks, but they may not be enough, so it’s something you might have to buy extra. You will need cooling tanks (storage tanks), processing tanks, and bulk tanks. Their approximate prices are:
- Processing tank (100 gallons): $4,000 each
- Cooling tank (220 gallons): $7,300 each
- Bulk tank (2,500 gallons): $20,700 each
The number of tanks you get will depend on how much milk you process daily.
Examples Of Milking Parlor Costs
To illustrate the final cost calculation, let’s use a few examples.
Example 1: 50 Cows, Rotary Parlor
If we have a dairy farm with 50 cows and a rotary milking parlor that can accommodate 20 cows at a time, and we opted for only the highest quality components, our cost calculation will look like this:
Construction Of Parlor (approx. 1,500 sq. ft.)
Installation of livestock chutes
Processing tanks (1,000 gallons)
Cooling tanks (2,200 gallons)
Bulk tanks (10,000 gallons)
Note that this is an extreme example because:
- Rotary parlors tend to be more expensive than other types of milking parlors.
- We went for a top-quality milking machine.
- This is likely an overbudget in terms of construction.
- We assumed that the milking machine does not include any chute equipment or tanks, and we have to buy those separately.
In a real-life scenario, this would hardly ever be the case.
Example 2: 50 Cows, Double Parallel Parlor
If we have a dairy farm with 50 cows and a double parallel milking parlor that can accommodate 20 cows at a time, and we opt for more affordable components, our cost calculation will look like this:
Construction Of Parlor (approx. 1,000 sq. ft.)
Installation of livestock chutes
Processing tanks (500 gallons)
Cooling tanks (1,100 gallons)
Bulk tanks (5,000 gallons)
This is a more realistic example because:
- The construction wasn’t as expensive as it could have been.
- We still went for a top-quality milking machine, but this time we assumed that much of the other equipment (like the chutes) would be included with the machine or the construction.
- We only bought extra tanks to supplement what we got with the machine.
Are There More Affordable Milking Parlor Options?
The costs involved in building and equipping a new milking parlor are immense. As a result, many dairy farm startups opt to have these financed through investment bankers and usually repay approximately $36,000 to $50,000 per annum. But there are ways to make this less expensive without necessarily buying low-quality products. You can do this in two ways:
- You could opt to purchase used equipment, but this won’t save money on the construction of the milking parlor’s building. Still, it could cut costs considerably for outfitting the parlor, including the materials you need for the livestock chutes, milking machines, tanks, and various other equipment and materials.
You can often find great deals on used materials and equipment if you ask around. For example, some dairy farmers may be upgrading their farms, requiring new equipment, and selling the things they will no longer need. You can also attend auctions to find some of these bargains.
- Retrofitting an existing barn could save you a fortune. A study conducted by Iowa State University found that retrofitting saved many dairy farmers more than $1,500 per stall. The study states the example of a double-8 milking parlor that would have cost approximately $240,000 to build brand-new.
Choosing to retrofit an existing barn into a pit parlor with a holding area instead cost the farmer a total of only $20,000, which is only 6% of the total cost of building it from scratch and less than what annual repayments would have been if they had financed the construction and fitment through an investment bank.
Dairy farmers with existing barns will do well if they investigate retrofitting as an option. One downside is that it could lead to a loss of production while the retrofitting is in process.
The cost of building a milking parlor for your dairy farm can be pretty steep, but it’s worth the expense since there can be a massive return on investment. However, because industry estimates state that it takes between three and seven years for a new milking parlor to become profitable, it’s best to investigate retrofitting as an option if you have the option at all.
This is not an Investment Advice
The Ideas and Strategies presented on this website and the information are based on our research and experience. These strategies are not intended to be a source of financial or business advice concerning the material presented. The information and/or documents contained on this website do not constitute investment advice. Any business idea or investment plan with financial risk should never be used without first assessing your own personal and financial situation or consulting a financial professional.