Developing A Goat Milk Market
Published on Fri, 06/09/2023 - 3:41pm
Developing A Goat Milk Market.
By Fred M. Hall, Iowa State University Extension.
In December the Iowa Dairy Team hosted two dairy goat programs, with one being in Orange City, Iowa. While they both shared topics and speakers, we added “building a goat milk market”. Since there is interest in selling milk, but no regional buyers, it seemed like a good topic.
Mitchel Kunkel with Stickney Hill Dairy in Rockville Mn., helped producers understand what it takes to sell milk and develop a profitable milk marketing plan. He shared that his company is short nearly one million pounds of milk to meet the product contracts they currently have and outlined how the company could work with Iowa producers to develop a plan to buy local milk. The evaluation at the end of the program found that 62 percent of producers were planning on expanding their operations in the next five years and an additional 25 percent would expand if a milk market was available.
Much like many areas of the country, Western Iowa dairies are active in farmer’s markets, convenience stores and niche markets promoting local crafters and artisan “lotions and potions”. This market allows for the seasonal fluctuations and provides profitable margins, but attentional labor.
Goat dairy farms generally lock their milk prices in at the beginning of the year for 12 months at a time, with varying rates depending on the season. There are set prices for winter, spring, summer and autumn months. Dairy goats tend to dry up and lower production in winter — hence a higher price rate during those months and a lower rate for early summer months, when goats have higher milk production.
The global population of goat continues to increase and is now over one billion. Data Bridge Market Research analyses that the goat milk market was valued at USD 12.55 billion in 2022 and is expected to reach USD 18.68 billion by 2030.
North America dominates the goat milk market in terms of revenue and market share due to the increasing demand of the goat milk products in this region. The growing consumer inclination towards healthy foods owing to the increasing consciousness regarding health and overall wellness, is enhancing the product demand in this region, thus driving the regional market growth.
The COVID-19 pandemic significantly affected various industries across the globe. The pandemic had a moderate impact on the goat milk products industry. It resulted in the uncertainty of raw material prices, shortage of goat feed, pandemic restrictions affecting the supply chain, and increased dependency on e-commerce platforms that negatively affected the market. During the confinement and post-confinement months, the economic impact of the pandemic on goat milk pricing was negative.
When goat milk is sold to the cheese production market the price for milk destined for this market is variable. Protein and butterfat content play a large part in determining the price received by producers. As stated before, prices also tend to vary with the season. So how do I tie this information together?
A growing market is good for the industry as a whole but may not benefit producers in areas like Northwest Iowa where there is currently no fluid market. Dairies need to be licensed with an “A” or “B” certificate to sell milk in Iowa. However, recently the state legislature legalized selling raw milk directly from farms. While the U.S. Food and Drug Administration banned the sale of raw milk across state lines in 1987, states can legalize the sale with safety requirements. Nebraska, Kansas, Missouri, and Illinois also allow the sale of raw milk on farms, but with various requirements. If you are considering selling raw milk, check with your state officials to confirm if it is legal and what requirements must be met.
As a producer considers developing a new product market, I suggest that the first step is to accurately figure their cost of production (COP). In the May 22 issue of the American Dairyman Dr. Larry Tranel outlined cost of production for milking systems, I’ll build on that information by introducing the question; “Will my new market price per cwt create the returns needed to justify this new investment?” Quoting Dr. Tranel- “You can cash flow very nicely while going broke”.
The math to figure cost of production is simple. If dollars of costs per hundredweight are desired, then just take total costs and divide by the number of hundredweights sold. This is sometimes referred to as the “per-unit sold” method.
Enterprise accounting is the gold standard for determining costs of production. Enterprise accounting involves a record-keeping system that allocates costs into the enterprises they serve. For example, feed costs for dairy goats are separated from those feed costs for other livestock on the farm. Once costs are allocated into their own enterprise, the numerator of the formula then becomes just those costs used to produce milk.
Knowing that cost makes it easy to find if the change will cover your cost of production and processing.
A dairy goat enterprise budget is available from Iowa State Extension at: file:///C:/Users/fredhall/Downloads/BFC26%20(4).pdf
A beginner dairy goat fact sheet with a budget is also available at: https://www.extension.iastate.edu/dairyteam/files/documents/Dairy%20GOAT...
Assuming you have a licensed dairy, your first step is to find a creamery that is already processing goat milk- there is no reason to “reinvent the wheel”. Chances are they may be looking for more milk and be willing to add a route to use your milk.
If you find you’re setting up a cheese business, it is essential you consider these things: property, building, septic system, electricity, water, insurance plus startup capital and operating capital. These are the basic parts of a business plan. Even the most basic plan will give you a rough idea of the feasibility of your project especially when the investment can easily exceed $100,000.
This is where your accountant or CPA needs to be involved. I’ll close with my dad’s favorite line for projects that I brought home- “If it doesn’t work on paper it won’t work after we’ve poured the cement!”