Matching Production Capacity and Product Markets

Matching Production Capacity and Product Markets

Dairy products, even cheese and ice cream, have a limited shelf life. This requires that you adequately project demand, or expected sales, for your value-added products and coordinate with your milk supply.

To achieve this, outline your short- and long-term goals for the value-added business regarding production growth and market expansion. Ask yourself:

Where do you see yourself in 2, 5, and 10 years when it comes to the breadth of products you make and the market outlets you sell through? Do you want to be a small processor selling through 1 or 2 outlets; or do you see yourself growing production and selling through a greater number of markets or wholesaling?

Will you be using all of your milk? Think about the quantity, shelf-life, storage, and fluctuations in the products that you manufacture. If you do not use all of your milk for production, where will it go?.

Will your co-op or processor still purchase it? Can you buy back the milk that you will need from your processor? Will you need to purchase milk from other producers?

Determine quantity and quality of milk needed. Consistency is important when manufacturing dairy products. It is key for both product quantity and quality. Close monitoring of components, somatic cell count, and bacteria counts is required. Consider seasonal fluctuations and develop management strategies including standard operating procedures to maintain consistency.

Do you know product yield estimates for what you plan to make? Having a good understanding of your farm production, can help you to plan for product yield. For example, 25 cows may yield approximately 9,000 gallons of fluid milk per week, which would yield approximately 900 pounds of cheese per week.

For more information on product yield you can use Table 2 from Get More from Your Milk: Increasing Profit through Value-Added Dairy Food Products.

How does your production capability match with the customer numbers for the markets you intend to market and sell through? Consider, how many people typically come to the farmers' market or frequent a particular restaurant that you're selling through.

Dairy product consumption varies throughout the year. While localized consumption and demand may differ somewhat from national patterns, you should develop an understanding of your products will be in greater demand and when demand will be lower.

Does your goal setting include considerations for scale-up? Scaling up production is typically more easily done than finding buyers for excess product quantities. Communication between your farm(?) operation and the processing or manufacturing side of the business will be key in making this balancing act work.

This program was developed by Food Safety CTS, LLC for Penn State University.