"Dairy pricing is cyclic" - something that we've all heard
during every high and low cycle of milk pricing. This current
lull in prices (lull being an understatement) has had me
talking with a flurry of farms about management strategies,
business planning, and the future of their farm. For many,
the conversation usually isn't about pulling out of dairy
production entirely, but rather finding a middle ground that
brings some stability to farm income and cash flow.
Usually, talks around dairy farm diversification can be a hum
of big dreams and lots of excitement. However, if you've
read any of my previous articles on farm diversification,
you'll know that it's not always the best fit for everyone.
Indeed, farm diversification isn't one size fits all and there
are other strategies farms can implement to weather periods
of tight, or negative, margins.

From my humble perspective, diversifying your dairy, in the
right situation, can lead to positive results. In this situation,
farm diversification looks like adding additional enterprises
(things you produce) that could provide other streams of
income. Here I've got five ideas for consideration for those
would like to brainstorm and dream. But - I would caution
folks against going forth and building big without strongly
considering farm business plan and financial implications.

1. Value Added Dairy. Most often, we think of dairy farm
diversification as processing your own milk and selling it
direct to consumer. While this can be worthwhile and
have higher profit margins, it's extremely complex with a
high investment cost. We do see a growing demand for
locally produced dairy products as consumers purchase
"for the story". *Note - we actually have a project going
right now that focuses on value added dairy and includes
resources, webinars, tours, and discussion groups.

2. Alternative Livestock. The sometimes not so fun thing
about cows is that they require a lot of equipment to
maintain. This includes barns, manure handling, crop
production, and more. However, this intensive capital
demand does lend itself to creating opportunities for
other livestock. Once you're used to raising cows, you
can easily add other animals to your operation. Selling
these other animals, usually for meat production,
provides an additional stream of cash income. This could
include beef, sheep, goats, pork, poultry, and more.

3. Alternative Crops. Along with having all of the things to
raise animals, dairy farms also have all of the
things to feed cows. This includes equipment that can
grow other crops - or crops for other cows. Diversifying
revenue streams with crop production could look like
selling an extra crops other farms, or changing what's
planted to sell to other markets.

4. Agritourism. Another trendy option for diversification is
ag tourism. This might look like farm tours, social media,
farm-to-table opportunities, and on-farm sales. This
helps to improve the industry's relationship with
consumers and can provide other income streams. This is
the trickiest venture, in my experience, because of the
added risk, exposure, and considerations for dairy
producers. However, it's incredibly rewarding!

5. Energy. Solar. Wind. Methane. Timber. Natural Gas. All
topics that can be triggering to some, but can provide
business saving income to others. This decision will vary
from farm to farm with lots of consideration, but
exploring renewable energy opportunities can provide
significant cash streams in the right situations.

With farming, risk management is always at the top of mind.
Farm diversification can help as a price risk management tool
by increasing the number of revenue streams to decrease
the impact of market highs and lows. However, there is
always added risk whenever you're venturing into something
new. It's important to consider these risks and protect your
farm accordingly. This could include enhanced safety plans,
production processes, insurance coverage, and more.

For more information about farm diversification, contact
Katelyn Walley-Stoll at 716-640-0522. This article was written
as part of Cornell Cooperative Extension's "Diversifying Your
Dairy" initiative. This material is based upon work supported
by USDA/NIFA under award number 2021-70027-34693.