Missouri 400-cow dairy and 600-cow dairy business plans

Abstract

"This dairy farm business plan is intended to demonstrate one pathway for the next generation of Missouri's dairy farmers. This path involves next generation confinement housing solutions that can improve cow comfort and cooling while removing barriers to higher milk production. Two dairy herd sizes (400- and 690-cow units) are modeled here to fit differences in farm equity levels and available land resources. Each plan uses an integrated systems approach to combine capital investments, operating costs, production plans, rations, forage systems, housing systems and manure systems. Each model serves as a complete template for starting a new greenfield dairy. Currently operating dairies seldom start a greenfield dairy by designing a completely new dairy system. However, this strategy can be an option for dairy farms transitioning to the next generation – especially if milking and housing facilities are functionally obsolete, fully depreciated and poorly located for expansion. This report is designed to guide such farms in planning a completely new dairy. The templates in this report are also helpful for existing dairy producers evolving on-site in their current facilities as they examine possible technologies to use in a dairy's expansion path. Each economic model evaluates profitability and cash flow potential for each different herd size. This can inform a dairy's production goals and allow producers to evaluate how various investment and performance levels impact financial measures. Financial statements show how various components of the dairy operation impact the operation's cash flow, income statement and the five-year budget. Fitting these financial statements together captures the dairy's business potential. A comparison of key system components and financial indicators for each model is found in Exhibit A1. Each model assumes the dairy uses 100% equity financing, with no debt. Although unrealistic, this simplifying assumption allows lenders to quickly analyze the free cash flow to determine how much debt the operation could service."--First page.