How to calculate the cost of starting a dairy farm

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Starting your own dairy farm can be a matter of full-time employment, hobby farming or anything in between. Whatever your interest, calculating the cost of getting started in dairy farming is crucial. How much money you need to get started may be a big factor in whether you can jump right into a full-time dairy business or whether you must start small.

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  1. 1

    Take account of what you already have. If you already have pasture land, a barn and adequate fencing, you're off to a good start.

  2. 2

    Decide if you want to purchase a farm or simply lease some land. This is a large portion of the start-up costs for dairy farming.

  3. 3

    Get an estimate on fencing. Chances are you won't have enough natural barriers (like cliff walls) to keep the dairy animals contained, so determine how much it will cost you to add sufficient fencing.

  4. 4

    Determine whether you want any buildings or other structures, such as a barn for storing hay or for milking the animals. You may need a large barn, or you may just need a small covered area to protect you and the animal when milking.

  5. 5

    Add to the expected costs the price of purchasing dairy animals, veterinary services, equipment and other supplies. What you need largely depends on how large or small an operation you want to run. For instance, if you're planning to sell milk commercially, you probably need to purchase pasteurization equipment, which can be very expensive.

  6. 6

    Consult with a loan agent, if you're seeking a loan to cover start-up costs, to find out about down payments and loan fees. These administrative costs can quickly add up to significant amounts.

  7. 7

    Calculate the sum of all the associated costs. If the amount is too much for you to afford, start smaller. Go through the steps once more to see if you can find a more affordable solution.

Tips and warnings

  • If possible, you can cut costs by planning to do certain tasks (such as constructing outbuildings) yourself.
  • Don't forget about recurring costs. The start-up costs of dairy farming are one thing, but maintenance costs are another.
  • Remember that various government agencies will tax you at every opportunity.

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