Assembling a Team to Explore a Value-Added Dairy Enterprise

If you are considering a value-added dairy business, then I urge you to do research and have conversations with many people. When a producer expresses an interest in value-added dairy, a useful approach for gathering information and making an informed decision may be to consider forming a team. Or, if a functioning profit team already exists, then consider adding the possibility of a value-added enterprise to the agenda and allowing for extra meeting time.

Starting the Discussion

The following list contains some of the questions to explore during a team meeting.

• Why is the value-added venture being considered? What are the motivating factors? Is operating a farm and a food business realistic and appealing?
• How will value be added to current production? The type of value-added product under consideration may dictate different needs for your team. Some of the ways to add value to milk include manufacturing a new product, pursuing a strategy to market the product in a new way, and utilizing an alternative production system.
• Will the product be manufactured/processed at the farm, or will another business be under contract to manufacture the product?
• How are the start-up costs covered?
• Who will be involved and what will their involvement be?

As the discussion progresses, this topic may require separate meetings and additional team members with expertise in specific areas. The team should be dynamic in that members may not be needed for the entire duration and may exit the team while others may be added. For example, if the value-added business requires construction of a new facility, then it makes sense to involve people with expertise related to food processing facility construction standards, permitting, zoning, wastewater management, and engineering. Once some of the decisions are made for constructing the facility, the focus may shift more to the intended product(s) and require input on product development, manufacturing, packaging, storage, and food safety. Another offshoot of the team may focus on marketing and distribution of the product.

Who should be involved?

Here is a list of potential contributors to a value-added dairy team.

• Family and/or business partners need to weigh in on the discussion to determine whether they are supportive and what their roles are.
• Regulatory personnel or inspectors can provide input prior to construction by conducting a plan review. Multiple agencies or departments may be involved with permitting and zoning requirements. Variation is likely from state to state when encompassing food safety requirements, wastewater management, and building codes.
• Extension educators and specialists can assist with various aspects of value-added production, from farm management, including milk quality and production, to business management, including feasibility analysis and marketing, to food safety and product manufacturing guidance.
• An engineer may lend expertise on needs such as facility design, including locating a building site, space for manufacturing products, storage facilities, and equipment design and requirements.
• Another value-added dairy entrepreneur can share wisdom and insight gained in setting up their business. They have been through the process and are likely to have a unique perspective compared to other team members.
• A consultant could add expertise on a range of topics, such as food product development and manufacturing, labeling and packaging your product, or developing a business plan.
• Depending on the type of value-added product that your farm is considering, dairy industry professionals, such as a veterinarian, nutritionist, or artificial insemination (AI) specialist should not be overlooked if your value-added product revolves around a shift in production systems such as transitioning to grass-fed or organic or capitalizing on the genetics of your herd, for example, by marketing A2 milk.
• A financial specialist is a key member to provide data on the current costs of production, as well as budgeting for anticipated costs associated with starting the business, such as the purchase of equipment or the construction of a facility.
• A builder who has experience in constructing food processing facilities can bring recommendations to the table based on previous experience.

Surrounding yourself with people who can assist with weighing the options and providing constructive input can be beneficial for someone looking to get into the value-added dairy arena.