Economy and viability of a dairy workshop

Technical articles - Productivity, Diversification

Livestock farming Livestock farming Investment costs Working time Milk valorization Economic profitability

Controlling costs, anticipating workloads, and knowing realistic margins are essential to make on-farm dairy processing a viable activity. Here are the main benchmarks derived from field experiences and technical studies.

Investment costs (excluding building)

Initial investments vary depending on the product range and the level of automation. Here are some orders of magnitude for a workshop processing between 30,000 and 70,000 L/year:

Item	Estimated cost
Pasteurization vat	€13,000 to €15,000
Heat sealer	About €4,000
Incubator	€5,000
Automatic packaging machine	€25,000 to €35,000
Cold room	About €1,200 / m²

Additional indirect costs include connections (water, electricity), cleaning equipment, packaging, transport, software, training, and sometimes permits or administrative authorizations.

Working time by product range

Working time varies greatly depending on the product range produced. Here are averages expressed in hours per 1,000 L of milk processed:

Product range	Estimated time (h / 1,000 L of milk)
Butter / Cream	16 h
Yogurt / Fresh cheese	49 h
Aged cheeses	25 to 37 h
Diversified range	About 52 h

Yogurts require more work due to the multiplication of handling steps (pasteurization, incubation, individual packaging, cleaning…). A diversified range demands more labor but also allows for better valorization of the milk.

Time according to volume processed

Productivity increases with volumes, thanks to economies of scale. Here are the average times observed as an overall average for all products combined in on-farm dairy processing workshops (butter, yogurt, cheese, etc.):

This helps adjust objectives according to human capacities.

Annual volume processed	< 50,000 L	50,000 to 200,000 L	> 200,000 L
Average time (h / 1,000 L)	44 h	31 h	24 h

Average valorization of processed milk

Processing your milk allows a net margin much higher than raw milk sales, provided costs are controlled and sales channels adapted. Here are some benchmarks:

These figures strongly depend on the chosen sales channel, positioning, and type of packaging.

Final product	Average price / L of milk processed (average selling prices observed per liter of milk processed, depending on the final product)
Raw milk	€0.90
Butter	€0.60 to €0.70
Yogurt	About €2
Farm-made ice cream	Up to €10

Workshop size and volume processed

Here are some benchmarks according to your project:

Workshop area	Annual volume	Typical products
30 m²	20,000 L	Yogurts, butter
70 m²	40,000 L	Yogurts, fresh cheeses
100 m²	60,000 L	Yogurts, medium range
1,000 m²	1,000,000 L	Full range, several FTEs (Full-Time Equivalents)

Observed profitability

The national CasDAR RCC study highlighted a wide diversity of economic results depending on volumes, product range, and organization.

These figures depend on volume processed, product range choice, sales channel, and cost control.

Indicator	Average	Top third
Result per FTE	€22,590	€35,400
Result per hour	€10.9 / h	€17.5 / h

On-farm dairy processing can bring a real added value to the milk produced on the farm, provided there is a clear vision of costs, working time, and margins. To be viable, a workshop must rely on good organization, an adapted volume, and coherent sales channels. Estimating your project from the start is essential to build a profitable and sustainable activity.

Sources

On-farm dairy processing, Marketing your dairy products, Hygiene and sanitary obligations in on-farm dairy processing