Great Lakes Dairy Sheep Symposium - the Department of Animal ...

PROFITABILITY OF SMALL RUMINANT FARMSTEAD DAIRY PROCESSING
OPERATIONS
Robert Parsons
University of Vermont - Department of Community Development and Applied Economics
Burlington, Vermont, USA
Problem Statement
Mark Stephenson and Chuck Nicholson
Cornell University Program on Dairy Markets and Policy
Ithaca, New York, USA
To paraphrase Mark Twain a bit out of context, “Everyone talks about value-added dairy
operations but no one does anything about it.” There is a huge void of data on the profitability of
farmstead dairy processing operations available for farmers, extension specialists, and lenders.
There is even a greater lack of information when done with small ruminants. Extension
specialists from across the country report getting increasingly more calls from farmers interested
in doing their own processing. But the only information available comes from spot and second
hand reports.
To help bridge this gap, Cornell University Program on Dairy Markets and Policy, in
cooperation with University of Vermont Extension researchers and the Wisconsin Department of
Agriculture, Trade & Consumer Protection, developed a study in 2004 to examine the
profitability of farmstead dairy processing operations. The study included cow, sheep, and goat
operations with production of fluid milk, cheese, yogurt, and ice cream.
The purpose of the study was to examine the financial performance of small-scale dairy
processing businesses for profitability, investment, and markets. The results of the study would
provide information to individual processing businesses on their financial performance as
compared to others in a similar business. In addition, the study would provide educators, animal
industry groups, and policymakers updated information on the financial status of these
enterprises. So Mr. Twain, someone decided to do something about obtaining information on
value-added farmstead cheese operations.
Study Methodology
The targets of this study were farmsteads attempting to capture additional profits from
performing value-added processing and marketing of their own dairy products. The researchers’
initial criteria for farms to participate in the study were farms that produced and processed their
own milk. An additional requirement was that the farms had to have been involved in processing
milk for more than one year so to eliminate immediate start-up operations.
Initial producer identification was obtained from the respective state agencies for dairy
product licensing and inspection. Then all farmers were contacted by mail inviting them to
participate in the study. The letter informed the farmer we would need all sales and production
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