Editor's note: The follow article was featured in the May issue of Dairy Herd Management. Click here to read more from the issue.

Like many dairy farm families over the years, our family spent many hours talking and dreaming about what it would be like to bottle our own milk or make our own cheese.

Young Farmer: Creating and establishing our value-added productThese talks and dreams got more serious when we reached a crossroads: the opportunity to bring more family back into the operation, but faced with the common challenge of not having enough income to support everyone who wanted to be involved. At this point, our family had to make a decision – to venture out and take a big risk, or continue as we were and have family members seek off-farm employment.

We took many family road trips to Iowa, Wisconsin, Indiana and Ohio to look at other families who had taken a leap of faith and started on-farm processing plants. We were very encouraged by how their businesses were going, and how they were able to bring more family into their operation.  We looked at different products: people were processing milk, cheese, butter, ice cream and yogurt. With everything we saw, we believed fluid milk would be the right fit for us, creating the best marketing opportunity for our family.

With had enough positive research to move forward, but now it was time to see if we had financial backing to get serious. Living in a small town and having a banker who knew us was key. We explained our ideas and shared our research, and he was ready to finance us if we wanted to take the next step. The decision was in our hands, and everything was in place if we were ready to jump into a new adventure.

After some more thought, we began working towards our on-farm milk processing plant. From the time we made our decision to the time we had a plant ready to operate took about a year.  It was also at this point we realized we may know something about dairy farming, but we had a lot to learn about processing and marketing milk.

We made a couple of important decisions that were key to helping us prepare to bottle our own milk.

First, we brought in a family friend who had extensive marketing and branding background. He was able to help us create our brand and prepare marketing materials.

We also hired a business consultant who had experience with farmstead operations. He was able to help us determine where and how to sell our product, and advised us on setting pricing.

These were all things critical in getting started, but things we personally didn’t have the knowledge to create on our own.

In June of 2009, the first jugs of Kilgus Farmstead non-homogenized, single-source, all-Jersey milk rolled off the line, and our value-added product had been born. We found out quickly that when you throw a new product out in the marketplace, you have to get out and educate the public about it and convince them to buy it.  The first several months was a learning curve, until we got a sound market established and a good handle on how all the processing equipment worked. The startup days created a lot of sleepless nights and a lot of stressful days until we got things running smoothly.

Nearly five years later, we can look back and believe that stressful period was worth it. Creating a value-added product has created a family enterprise, allowing us to grow our family farming operation  and include more family members in the business. It has also is a rewarding feeling to see your own brand of milk sitting on the supermarket shelves.

Matt Kilgus and his uncle, Paul, are co-owners of Kilgus Dairy and Kilgus Farmstead, Fairbury, Ill. Paul and his son Trent manage the dairy herd, which includes 130 registered Jersey cows, 75 calves and heifers and 50 steers. The herd’s milk goes to Kilgus Farmstead, managed by Matt and his cousin Justin. It is the only single-source farmstead milk bottling plant in Central Illinois.

Products (whole, 2%, skim and chocolate milk, heavy cream, and half and half) are sold at retail outlets within 150 miles of the farm. For more information, visit www.kilgusfarmstead.com or email kilgusfarmstead@gmail.com.