US farmers diversify as milk prices nose-dive

Dave Kohl, an agricultural economist at Virginia Tech University, says low milk prices are leading many dairy producers to seek out opportunities in side businesses. Dave warns that without a strong written plan and a willingness to lose money or break even for the first few years  these new endeavors can quickly become a sinkhole rather than a route to higher profits. “Everyone’s grasping right now,” he explains. “You have to go through that self-examination. Another thing that’s really critical is, do you have a passion for the diversified enterprise you’re going into. If you go into something and don’t have passion for it, it can become a beast of burden.” Dairying in the US is so labour-intensive, producers should stay away from diversified enterprises that will require more than 1 000 hours of their time each year. Oftentimes a safer threshold is 500 annual hours.

“Pursuing a business that demands that much time or more could hinder your primary milking operation,” says Dave, who is part-owner of a diversified milk processing, ice cream production and home delivery business started 16 years ago.  – Dairy Herd. To read more about this, click HERE.