“The number of dairy farms is declining but their average size is growing,” per the Economic Research Service of the USDA. Large dairy farms have dominated and gradually edged out small
family-owned dairy farms. With costs of running a dairy farm ever increasing, small to medium owners can turn to dairy farm loans. Find out how you can start your own dairy farm with this kind of financing.
Looking to start your own farm business? We can help.»
What It Takes to Run a Dairy Farm
The underlying ERS
research, which covered changes in US dairy farms from 1970 to 2006, noted how small dairy farms are disappearing, contributing just over 1% of the total milk production in 2006.
Small dairy farms with a fewer than 30 cows face competition from large-scale dairy farms with more than 15,000 cows. Some of these family-owned enterprises also don’t have a family member to pass on the business to mainly because it does not look profitable.
In the face of mounting costs versus stagnating income as milk prices are now hinged on global prices, operating a dairy farm is a challenge. Here’s a checklist of the things you need to buy outright or finance through dairy farm loans, including but not limited to:
- Cows – Milk cows (those that have given birth to calves), bulls, heifers, calves. Their breeds: the stereotypical black-and-white Holsteins, Jerseys, Guernseys, and more.
- Land for fodder production, irrigation and farm buildings
- Food: grains or grass
- Animal nutrition and veterinary care
- Buildings including sheds and structures
- Equipment and machinery such as tractors, feed grinders, milk cans, etc.
- Workforce to manage and take care of the farm
The disposal of cow waste can be an added cost for dairy farmers who have to adapt to modern and environmentally sustainable methods.
Click here to get matched with a lender.»
Dairy Farm Loans for Dairy Financing
The above costs and more are necessary for milk production as well as cheese, butter and yogurt. You need capital to run your dairy farm efficiently. Private lenders can offer dairy farm loans for small and medium sized owners.
Notably, the USDA’s Farm Service Agency maintains a number of loan programs for farmers and ranchers. The FSA’s farm loan programs are as follows:
- General farm loans such as farm operating loans, microloans, farm ownership loans, guaranteed farm loans.
- Targeted farm loans for the “youth” farmers, minority and women farmers, beginner farmers and ranchers, etc.
- Specialty loans for Native Americans and those with farms hit by natural calamities.
Rates on dairy farm loans vary lender to lender. The FSA, for one, has its own loan rate schedule. So do the qualifications and requirements for these loans. It’s best to do your research and have a solid business plan to vouch for your creditworthiness.
Manage your costs so you can price your dairy products competitively and still earn adequately to continue operating your dairy farm. You can also join farmer networks such as the Dairy Farmers of America, which is a national cooperative of dairy farmers, to sell your milk, cheese and dairy.
Invest in your dairy business and its success.
Talk to a lender today.»