Google

Wednesday, May 13, 2015

So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know.

Well, it appears that there are lots of people in New Zealand (and the world) who want to either set up their own milk business or want to go mobile milking.

My goal is to set up a streamlined system that will allow others to start their own small scale dairy business. 

My inbox is full of people asking me questions about how to set up their own milk business. I would spend 45 minutes to an hour replying to these emails from complete strangers. I did it because I want to promote small scale dairy & I want others to do well.

But of all these emails I've replied to, less than 10% of these people actually reply back to me. I think it is just good manners to at least flick a quick response back to me saying "Thanks Glen". 

So I'm reluctant to devote much time to tyre kickers. I'm more than willing to help people who are serious about setting up a micro dairy. Any enquiries I get from now on will be directed to this blog post.


The equipment is the easy part

Lots of people are asking questions about the mobile cowshed or the pasteuriser or various equipment questions. But in many respects the equipment is the least of the issues that need to be faced.

To build a mobile cowshed you simply need to talk to an engineer and your local milking machine guy and you'll be able to get something made up.

The mobile milking equipment simply allows people to get into the milk production business at a lower cost. 

People still need to have willing customers, provide customer service, match supply to demand and generally be better than their competition. All the while dealing with the regulations and the significant ongoing regulatory compliance.

The real issue you worry about is Too much work for too little money


Small business is hard

Small businesses have a terrible success rate. Studies from around the world all seem to show a pretty bleak picture.
"8 out of 10 new businesses fail within the first three years"
"80 percent of new businesses fail within the first five years"
"53 percent of small to medium-sized enterprises (SME) fail within the first three years"

Is it really worth it?

I recently spoke to a cheese maker who was shutting down their business. They had an award winning product that was stocked in major supermarkets. But when all things were considered, it was just too much work for too little money. 

I think many of the business failures we see in the statistics amount to the owners saying to themselves "for the amount of effort and stress I'm going through. The money is just not good enough. I may as well just get a job" 

Anyone can start a business, the hard part is creating a business that provides a healthy margin and does not require the owner to be over worked.

You need to overcome the following issues


Regulations

Any business that processes milk (or meat), comes under a whole extra range of food safety regulations. It's not like starting a cafe where the local council inspector does your audit once in a while.

These extra requirements are particularly difficult for small dairy producers. The story of Biddy is a classic example. MPI have to ensure she meets all the regulations. I support MPI's position, but at the same time the burden is huge on a business her size. I spend more time doing paper work than I do actually milking my cows. 
Don't underestimate the time it takes to be compliant. If you don't do it properly you will get smashed at your regular audits. 


Time off

Many small businesses are dependant on the owner. The owner has all the knowledge. The thing I have noticed with small food producers is that the operators find it very hard to take time off. The purpose of being in your own business is to have more options and a better lifestyle. When you are processing milk you can't just hire a relief milker, you need fully trained and competent people. How does a one man band justify the training expenses of someone who will only milk a few weeks a year. Don't forget, there is paperwork that needs to be done for new staff & this will be audited.


Time efficient operations

When you are small scale, you can't afford to be messing around all day. You will be amazed at how quickly your day disappears. 

Before you know it it's 4:00pm and all you've done is milk & feed 10 cows, pasteurise the milk and deliver it. 

This is when you work out the $/per hour and you realise you may as well just get a job!

You need a system that is automated and designed with time efficiency in mind. The problem is, if you're going to build your own system (like I have) you won't know what is going to take up all the time until you've built it. 

Even if you are awesome and you designed the perfect processing room/trailer/cowshed you need to be aware that nothing works as it should straight away. That gas hot water system won't keep working as they said it would, the pump they sold you will turn out to be inadequate 2 months into milking etc etc.


The hidden costs

Add $20,000 to your budget for unknown costs. You will need it.

Example 1
I've spent $3,500 on milk testing to determine where a bug was coming from. We found the source of the the bug, but no one can explain how that bug was making its way into the milk. It seemed like this bug was defying physics. The result was I modified my pasteuriser at a cost of $3,500. There's $7K of unbudgeted costs that you would never have anticipated.

Example 2
The stainless steel fittings used in the milking plant do not comply with the milk processing standards for the milk processing area. I only found that out during my inspection. Thats another $2,500.

I could go on and on. 

Glen's grand plan

My goal has never changed. It's been to create a dairy business that our best young New Zealanders want to be involved in and more importantly, can afford to be involved in.

There are three issues that I care about:
  1. Attracting our best young people to agribusiness
  2. Moving New Zealand agriculture up the value chain
  3. Truly sustainable dairy farming
Shortly I will officially launch my milk brand, Nature Matters Milk Company.

My vision is to set up a financially viable, environmentally sustainable, small scale dairy business that can be replicated throughout New Zealand by others.

My vision is to have a network of great people all around New Zealand supplying their local community with real, sustainable milk.

This is a network of people who understand, eco dairy farming, who understand processing and food safety, who also live and breathe customer service and understand marketing and how to build a branded business.

But there are many obstacles that need to crossed before this can happen. 

The most obvious obstacle is that, I don't even really know how to create a "financially viable, environmentally sustainable, small scale dairy business" as I described above. 

But I'm pretty sure I'll know in about 6 months time. 


We must join together

It makes no sense to have lots of individual farmers all operating and administering their own 20,000 word Risk Management Programmes, while competing against each other and working themselves into the ground. 

We need join together.

Fonterra farmers don't have to worry about dealing with MPI, because Fonterra have people to do that. Fonterra create the systems and procedures that the farmers need to follow.

I'm currently creating the systems and procedures and developing the equipment that will enable other small scale dairy farmers to comply with all the regulations, while also getting the daily tasks done quickly, efficiently and profitably. Doing it profitably is the hard bit.

For small scale farming to be viable we need to:

  • reduce the regulatory burden on individual farmers
  • co-ordinate fluctuating supply with fluctuating demand (don't underestimate this, it relates to profitability!)
  • ensure operators can get some time off

A network of micro dairy farmers

The idea is to create a network in which small scale farmers can "plug into".

I believe a network of savvy young (or young at heart) farmers, can secure at least 5% of the New Zealand milk market.


I'll detail some rough numbers to give you an indication of how big the market is.

5% of the NZ fresh milk market equates to about 20.25 million litres of milk per year. If we assume that a cow will produce around 3,000 litres (low estimate, equivalent to 270 kgms) in a year. Then we would require 6,750 cows to be in milk at any one time. Which is the equivalent of around 8 Canterbury dairy farms.

If we assume that a viable business requires 30 cows (not proven yet) then we would need
225 farmers. Maybe 50 cows will end up being an economic unit, in that case 135 farmers will be able to meet 5% of New Zealand's milk needs.


How can 30-50 cows be an economic unit?

The model I'm proposing is that the micro farmer is also the processor and the retailer, so they receive the total retail amount for their milk.

Below is a very rough and ready spreadsheet with some ballpark figures & estimates.


I still have no idea what the actual numbers are going to be.

My assumptions are conservative.

Production per cow is low, most dairy cows will be producing well over 400 kgms. I've assumed an eco cow in a dryland environment is much lower.

Revenue is also low, when you consider organic milk retails for $3.65/litre. Anchor blue top supermarket milk retails for $2.45. 

I've budgeted farm expenses at double that of the NZ dairy industry. I'm not sure what they will actually end up at. Staffing numbers will have a big impact on the final number. Remember there are no economies of scale in a small scale business.

Owner's drawings at $100,000. I want to attract our best young people, these people have options and the ability to earn good money elsewhere. For small scale eco farming to spread it has to be financially attractive. 

I want to stress these are rough estimates, experience has shown me that you never make as much money as you think you will. 

The reason for outlining these numbers is I want to show that it's entirely possible to farm sustainably on a small scale and still make a good living.


So If you're interested in being a small scale eco dairy farmer, then watch this space. 

Feel free to post a comment below or you can email me at glen dot herud at gmail dot com.





57 comments:

  1. I'm currently researching micro-dairies using the community supported agriculture model in the UK.

    ReplyDelete
    Replies
    1. Hi
      Do mean this organisation? http://www.soilassociation.org/communitysupportedagriculture
      Sounds like a great initiative.

      Thanks for sharing.

      Cheers
      Glen

      Delete
    2. Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download Now

      >>>>> Download Full

      Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download LINK

      >>>>> Download Now

      Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download Full

      >>>>> Download LINK J4

      Delete
  2. Hi Glen, how about your thoughts on robot milking. Maybe you have addressed this... I can't find a search function.
    Cheers, Trevor

    ReplyDelete
    Replies
    1. I'm interested in robotic milking. Its on my list of "things to try".
      I've spoken briefly to the robotic people. I think they have lots of potential in NZ. There is a mobile robotic milker mounted onto a trailer in Holland, which is right up my ally.

      Would be viable at about 50 cows.

      Cheers
      Glen

      Delete
  3. Hi, thanks for share great news, it really interesting for dairy business. This is very good suggestion for who want to start dairy business. But I have some queries about milk business that I will start robotic milking business and can you for help me? If yes, so you can just give me some procedures about it.

    Thanks

    http://www.abl-tech.com/

    ReplyDelete
  4. Hi There,

    My name is Akshay. I am based in Auckland. I am a budding entrepreneur from India, I have lived and studied in Ireland for almost 4 years (did my diploma in chemical & Pharma Science). Then went back to India, managed my family business of home furnishings manufacturing for almost 4 years. After working in my family business for this long I started exploring my options to do something else. Then this idea came across my mind that I should go to NZ and start my dairy farm there. I can see that you are also thinking on the same lines (you are planning to sell your own branded milk and after reading your blog posts I can see that you are an entrepreneur who values networking) . So, just wanted to know if it will be possible for you to share your mobile number or your email ID so that we can exchange some knowledge(about dairy industry) , ideas (we can try to brainstorm on some more innovative ideas to bring your novel idea to life). In this way may be we could help each other. I will also like to get some more insight about the dairy industry and the problems faced by entrepreneurs in dairy industry in NZ.

    I hope I not going too far! :-)

    Cheers!

    Akshay
    my email : aks270@gmail.com
    mobile : 022 457 6488

    ReplyDelete
  5. Thanks for the dairy cow farming facts. It's very helpful for the beginners. Thank you!

    ReplyDelete
  6. Hi Glen
    You are doing a fantastic job and I find your blog very interesting and appreciate the time you have spent sharing the information
    We are working on doing a smilar thing in Wellington but with goats. Have started small and selling enough for the goats to pay for themselves at this stage, not quite ready to quit the day job and go full scale. But its great to read your experiences and challenges.

    Thanks again
    Angela

    ReplyDelete
    Replies
    1. Thanks Angela, good luck with the goats too.
      Cheers
      Glen

      Delete
  7. well if dairy farming
    can be started and processed like this, i mean it looks so easy on paper but you have written about all the things that are going to happen... on the contrary there are some things that cant be achieved too... am not feeding a negative comment here.. but i wish you mentioned the practical issues too.... overall this is a great article and please keep posting.

    ReplyDelete
  8. Awesome blog. We have been considering this idea for several years. Havent been sure where to start and you have got stuck in! Would we be able to correspond with you about food safety management, regulations etc? We supply fonterra from a small 'marginal' north island farm. We want to move away from this globalisation model towards a more sustainable locavore and ethical model.

    Cheers
    Rowan

    Ps we supply raw milk to some locals one day a week but as you say it has many pitfalls from a good safety point of view. It ends up being more of a community service than an earner!

    ReplyDelete
    Replies
    1. Hi Feel free to give me a call, 021 685 690. Cheers Glen

      Delete
  9. We offer the finest gea milking machine products to the client at very reasonable rates. If anyone interested to buy any machine then you can visit our website

    ReplyDelete
  10. Thanks for sharing this blog!!
    Here you can Post New and Used Mobiles For Sale . On this classified site, you can post the ads with the full description of mobiles such as model, color, price range, functionality, brand.

    ReplyDelete
  11. If you want the milk products of good quality then you can you must choose the dairy equipments of high quality and from best suppliers in India. With theses equipments, you can get a wide range of advantages.

    ReplyDelete
  12. Great Blog VITA Farms Provides Services for natural farm fresh Gir cows A2 milk, A2 milk doorstep delivery Mumbai, Gir cows milk home delivery in Mumbai, Desi cow Milk in Mumbai, A2 milk, Gir cows milk Mumbai, Best organic milk India Desi Cow, Gir Cow Milk, Organic Milks, A2 Milks Home Delivery in Mumbai call us +91-7303876876

    ReplyDelete
  13. That's really great post thanks for sharing with us. Well anyone from you want to know the all the details about the Milking Machine they can easily click on the link and watch the full video.

    ReplyDelete
  14. Very Impressive and helpful blog. I appreciate your efforts and hard work. Keep on sharing
    Buy Herbal Incense Online

    ReplyDelete
  15. Having a business to run on your own isn't easy. Unfortunately, having decent software to back you up is often ignored and understated, without realising how much of a relief it can be when it comes to managing a busy enterprise, or even a small business that you share with just a few mates.
    Having proper software, like dynamics 365 for operations is crucial to keeping things tidy and therefore, to a company's success.

    ReplyDelete
  16. You've got my attention!! Just finishing 50 50 milking and have purchased 37 idyllic hectares. We came across this when I was looking for prices of building small cowshed. Got busy last season to complete but then would love to get more information and be part of further developments.

    ReplyDelete
  17. Nice services, We are also helping businesses to setup milk firms.
    please visit our website or contact us for more information.

    Milk Cooling Machines prices in India

    ReplyDelete
  18. When I'm thinking business, I'm also thinking ERP software! I might be getting microsoft dynamics 365 from https://ax-dynamics.com/microsoft-dynamics-365 as it's believed to be one of the most versatile erp products - and it's so efficient!

    ReplyDelete
  19. Communication with the client is also important in the company. We recently had a problem because our e-mails were treated as spam. Fortunately, he helped us https://correct.email/

    ReplyDelete
  20. ENOUGH IS ENOUGH FOR THE WISE,PROSPER LOAN FIRM IS THE ONLY WAY OUT FROM ANY FINANCIAL DIFFICULTIES { prosperloanfirm@yahoo.com }

    Greetings great mind, It will be my greatest pleasure saving Individuals and companies from extortion, I know not everyone will want to take it upon their self to reveal the bitter truth about online Lending because of insecurity, Time of doing it and all that. I Ryan F. Tyler, an outstanding businessman who reside at Oakland, California has taken it upon himself to share this article to whom it may concern so they can learn and educate their self from it . It's bad to the extend where you see testimonies online about getting a loan and it turn out to be fake. For real i have fallen for that tricks countless time to the extend i lost almost 65,000usd in total all in the name of getting a loan to invest in a very lucrative business. After so many failed attempt of securing a loan, I and my Manager went online to do a thorough search and found this company PROSPER LOAN FIRM +1(816) 366-8769 ) but before giving it a try we also went ahead to make sure they are registered under BBB, check their reviews and also go to their headquarter to confirm their existence and capability.We were so careful because we didn't wanted to lose any dime again and to our greatest expectation they deliver according to their review and grant us our desire loan amount of 510,000.00Usd. A word to everyone out there when it comes to Online Lenders contact only PROSPER LOAN FIRM via email: { prosperloanfirm@yahoo.com } or drop a message to them via text at +1(816) 366-8769 and consider all your financial problems tackled and solved.#SHARE, You can rescue someone from been victimized today, Thanks.

    ReplyDelete
  21. thank you for sharing helfull information about dairy farming with milkon the moove desigircowmilk

    ReplyDelete
  22. This article is has taught me on what it takes for starting your own daily business and what you need to look out for….pitfalls that should be avoided and what kind of smartness is really needed to survice and be profitable in this industry as a small business owner. Visit: http://goma.co.in/

    ReplyDelete
  23. Hi,It's a nice post and thanks for sharing me a valuable information
    Process Engineers And Associates is established as one of the highly experienced Dairy Equipment Manufacturers. Manufacturing every machine with food grade material, they maintain the highest standards of quality in their products.

    ReplyDelete
  24. Thanks for sharing a useful information.
    If you are Looking for Supreme Quality Milk Storage Tank at a Low-budget, then contact NK Dairy Equpiments.Their amazing devices are made for customer satisfaction.

    ReplyDelete
  25. Interesting post on what it takes to setup a dairy unit today and earn profits from it. Today you can find so many milk processing plant models which take away the efforts of manual labor and make milk processing fast. It helps reduce costs and also increases profits in a short while. Visit: http://goma.co.in/

    ReplyDelete
  26. A very energetic and informative article. I really appreciate this post thank you for sharing these type of posts.
    https://www.bharattaxi.com/bangalore

    ReplyDelete
  27. Nice Post thanks for the information, good information & very helpful for others. For more information about Online Shopping Lucky Winner, Flipkart,

    HomeShop18, Shopping Lucky, Draw, Contest, Winner, Prize, Result, 2018 - 2019 Click Here to Read More

    ReplyDelete
  28. Halo,I'm Helena Julio from Ecuador,I want to talk good about Le_Meridian Funding Service on this topic.Le_Meridian Funding Service gives me financial support when all bank in my city turned down my request to grant me a loan of 500,000.00 USD, I tried all i could to get a loan from my banks here in Ecuador but they all turned me down because my credit was low but with god grace I came to know about Le_Meridian so I decided to give a try to apply for the loan. with God willing they grant me  loan of 500,000.00 USD the loan request that my banks here in Ecuador has turned me down for, it was really awesome doing business with them and my business is going well now. Here is Le_Meridian Funding Investment Email/WhatsApp Contact if you wish to apply loan from them.Email:lfdsloans@lemeridianfds.com / lfdsloans@outlook.comWhatsApp Contact:+1-989-394-3740.

    ReplyDelete
  29. Check out the Requirements to have a profitable income from Dairy Business, click here starting business in dairy industry in india

    ReplyDelete
  30. Nice Blog.
    We are considered one of the Finest Dairy Equipment Suppliers in Yamunanagar. Just visit the link to know more.

    ReplyDelete
  31. Registering an agency through online is some notion of not trusty or with terrible reports in right here u can learn and do your personal organization registration with our help test us Company Registration in delhi

    ReplyDelete
  32. “I could not have closed on my first home without Mr, Benjamin Lee ! Benjamin and his team went above and beyond for me on this transaction. He handled my very tight turn around time with ease and was always available for me when I had questions (and I had plenty), even when he was away from the office, which I greatly appreciated! He and his team handled many last-minute scrambles with the seller and worked tirelessly to make sure that I could close before my lease (and my down payment assistance, for that matter) expired. Mr Benjamin is incredibly knowledgeable Loan Officer, courteous, and patient. I went through a couple offers on properties before my final purchase and Benjamin was there to help with each one, often coordinating with my agent behind the scenes. I felt supported throughout the entire process. Thanks to Benjamin and the tireless efforts of his team, I am now a proud home owner! I would encourage you to consider Benjamin Briel Lee for any kind of loan.Mr, Benjamin Lee Contact informaions.via WhatsApp +1-989-394-3740  Email- lfdsloans@outlook.com.

    ReplyDelete
  33. Digital Scales Nz
    Digital Scales in this range all measure in 0.1 gram increments up to the maximum weights stated. All scales are supplied with batteries for operation but they do not include calibration weights.

    ReplyDelete
  34. Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download Now

    >>>>> Download Full

    Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download LINK

    >>>>> Download Now

    Milking On The Moove By Glen Herud: So You Want To Set Up Your Own Small Scale Milk Business? This Is What You Really Need To Know. >>>>> Download Full

    >>>>> Download LINK

    ReplyDelete
  35. Thanks for sharing the article! always buy the fresh cow milk in Chennai, they provide fresh and healthy milk.

    ReplyDelete
  36. "I found this blog post on setting up a small dairy farm in Chennai quite informative. It's essential to prioritize the quality of fresh cow milk in Chennai, and this article offers valuable insights into achieving that. The tips on farm management and hygiene are particularly helpful for aspiring dairy entrepreneurs. Thanks for sharing!"
    Fresh Cow Milk In Chennai
    Cow Milk Chennai

    ReplyDelete
  37. Hello, my name is Paul Kevin It is a pleasure to introduce Mr. Damian loan company to Everybody, I finally got a loan after fulfilling all the necessary requirements, Contact this honest agent now this (WhatsApp) number +918131851434 sumitihomelend@gmail.com
    Regards

    ReplyDelete
  38. This comment has been removed by the author.

    ReplyDelete
  39. Nurse salaries in the USA vary significantly based on factors such as location, experience, and specialization. Registered nurses earn an average annual salary between $60,000 and $80,000. However, in urban areas with a higher cost of living, such as New York and San Francisco, salaries can exceed $100,000. Specialized roles, including nurse practitioners and nurse anesthetists, typically command higher salaries due to their advanced skills and responsibilities. Salary increases are common as nurses accumulate experience, further enhancing their earning potential. Additional financial incentives like bonuses and shift differentials often supplement base salaries. The ongoing demand for nursing professionals ensures a stable job market and promising financial outlook. Overall, nursing in the USA offers a competitive salary structure alongside fulfilling career opportunities.
    https://www.dynamichealthstaff.com/nurse-salary-in-usa

    ReplyDelete
  40. House Clearance Edinburgh is your go-to provider for all home clearance needs. Our skilled team handles everything from organizing and decluttering to the responsible disposal of unwanted items. We offer services to both residential and commercial clients, ensuring a seamless experience. Whether you're downsizing, renovating, or simply clearing space, we provide customized solutions to meet your specific needs. We are committed to environmentally friendly practices, ensuring items are recycled or disposed of responsibly. With a focus on efficiency and professionalism, we make the clearance process stress-free. Trust House Clearance Edinburgh to leave your property clean and ready for its next phase.
    https://eh1-edinburghremovals.co.uk/house-clearance/

    ReplyDelete