Blueprint for a Successful Dairy Expansion

¹ University of Missouri Extension, Columbia 65211

Increased competition in the US dairy industry has created the opportunity for many dairy producers to lower costs, increase productivity, and realize greater profits. One way to achieve this goal is through a major expansion in herd size, but expansions are also fraught with risks. Poor planning can result in cash flow problems, inadequate financing, or lack of the management resources needed for a successful expansion. The objective of this paper was to develop a guideline for dairy producers to follow in implementing a successful expansion plan. This blueprint requires producers to follow through on a number of critical phases: planning, implementation, and management. Planning involves assessing family goals and developing a written business plan. Implementation involves financing, construction, and start-up procedures as well as developing a management team. Management involves managing a labor force, directing resources, and using cash flow planning and financial management tools. Following this blueprint should help producers minimize risk and achieve the goals stated in their business plans.

Key Words: dairy expansion • financial planning • management

Submitted on April 12, 1996
Accepted on May 5, 1997