"Value-added" is the incremental value that is realized by a producer from an agricultural commodity or product as the result of a change in physical state, differentiated production or marketing, as demonstrated in a business plan; product segregation. Applied to milk, a change in physical state means fluid milk is being made into products like cheese, yogurt, ice cream or other processed dairy products.
While cows are the most commonly recognized dairy animal, goats and sheep are also dairy animals that offer their own advantages to someone considering a new dairy and value-added product business. Goats and sheep are smaller, and though they produce less milk, their milk is higher in fat and protein - valuable components in the production of some dairy products.
Get More From Your Milk: Increasing Profit Through Value-Added Products is a free publication available through Penn State's College of Agricultural Sciences covering detailed aspects of producing value-added dairy products. This publication will provide you with an overview of the different aspects of starting a farmstead dairy processing enterprise from business planning to marketing to regulations. The Penn State Extension site provides information about the local, state, and federal regulations that a dairy producer must adhere to when operating a dairy products enterprise.
If your dairy isn't already well-managed and producing high-quality milk, launching a value-added enterprise isn't the solution. It's important that you correct any issues with a poorly performing dairy before starting a processing venture. Sanitation for a dairy processing facility is of utmost concern and can be addressed by following a thorough routine.
It is also vital that you have a solid understanding of the production of the dairy product(s) you plan to process. There are a numerous resources available to learn the art and science of dairy product production.
For those desiring to sell raw milk within PA, this fact sheet - Raw Milk Regulations - provides an overview of the necessary requirements, including permitting.
Cheese is by far the most popular value-added dairy product for farmstead dairy processors. This is due both to popularity of cheese with consumers as well as the ability to age and store cheese for long periods of time. In 2014, at the time of publication, there were 132 dairy plants producing cheese in PA as listed in the PA Dairy Plant and Raw Milk Directory .
Numerous workshops and publications abound for those wishing to learn how to make cheese. Workshops range from introductory level one day workshops to multi-day intensive courses. Penn State Food Science offers The Science and Art of Cheese Making Short Course.
The origins of dairy product short courses began with Penn State University's Ice Cream Short Course. An intensive, week-long course that covers all aspects of ice cream production it may seem overwhelming to a novice. However, Penn State also offers an Ice Cream 101 two day course, especially designed for small scale operators and those new to frozen dairy product processing.
Cultured Dairy Products
The Penn State Food Science Department also offers an annual Cultured Dairy Products short course for anyone processing yogurt, cream cheese, cheese, buttermilk, or sour cream. As with most dairy products, a great number of publications and articles exist that provide basic directions for making the dairy product, sometimes along with recipes, such as this publication on yogurt from the University of Missouri, Making Yogurt at Home: Country Living Series.
Equipment, Services and Trade Organizations
Developing and maintaining trusted and reliable relationships with input suppliers and testing laboratories will be essential to successful operations. The persons in these business often become a crucial component to product development and processing. In addition, by becoming an active member of professional associations and through the subscription to relevant industry publications, producers can access a wealth of information and resources to assist in the operation of a successful business.