Ken Bailey, agricultural economist at Penn State University, offered the following ways that small dairies can achieve success at a seminar held during World Dairy Expo in Madison, Wis.:
- Consider expanding your herd size by a moderate degree each year. If you don't want to or can't afford to expand your business, consider adding value to your operation - only if it makes good economic sense - through value-added enterprises such as operating farm tours, bottling your own milk, or running a bed and breakfast.
- Strive to increase milk production per cow. The more milk you get from each cow, the lower your per-unit expenses and the greater your profits, Bailey says.
- Establish an asset turnover ratio that makes sense. "Sit down and pencil out your annual sales," Bailey says. Then, make sure they match up with farm assets.
- Make use of a strong business plan. "Pencil out where you want to be in five years," Bailey says. Once the big plan is in place, sketch out an annual operating plan that includes number of cows, milk production and milk price needed to generate a profit.
- Develop a detailed management plan that includes a list of daily activities that everyone is going to do each day.