Microdairy: Creating a Profitable Five-Cow Dairy

Final Report for LNE00-140

Project Type: Research and Education
Funds awarded in 2000: $168,590.00
Projected End Date: 12/31/2004
Matching Non-Federal Funds: $133,472.00
Region: Northeast
State: Maryland
Project Leader:
Frank Kipe
Old Springhouse Farm
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Project Information


The goal of this project is to design and construct an on-farm milk processing trailer (MicroDairy) that meets the requirements of the Pasteurized Milk Ordinance. Once the unit has been constructed it will be operated for two years to demonstrate the profitability of small-scale animal husbandry. This unit will contain all of the facilities required to milk cows and to store, pasteurize, and process the milk into a variety of products including fluid milk, flavored milk drinks, ice cream, and cultured dairy products such as cheese and yogurt. It will also contain a retail sales area for on-farm sales.


There are four beneficiaries of this project: farmers, extension service personnel, regulatory personnel and the community (including both consumers/customers and neighbors of farmers.

Farmers are declining in number, they are under increasing financial pressure and they are receiving a shrinking share of the retail value of the food they produce. Many farmers have seen the opportunity to increase their income by doing on-farm processing but then they are confronted with the hundreds of pages of regulations in the Pasteurized Milk Ordinance, and the fact that there are virtually no manufacturers of small scale processing equipment. Consequently, only a very few farmers with rare combinations of skill and persistence are able to make the transition to on-farm processing. It is the goal of this project to make that transition much easier by providing an equipment and procedural blueprint.

Extension personnel are being called on to provide advice to farmers and frequently they have few alternatives available to recommend to farmers and people who would like to begin farming. This project will give them choices: multiple species of animals, multiple products to market, detailed guidelines to follow and mentors to consult with.

Regulatory personnel are faced with the challenge of having to interpret guidelines that were written for large operations and rationalizing them to the small on-farm processing niche. Since each farm is so different, approving each facility takes a disproportionate amount of time compared to the volume of food produced. With this project they can maximize their effectiveness with a facility that has been largely pre-approved.

Community members insist primarily on clean fresh air and water. They are also excellent potential customers for farmers that are successful in producing a high quality product in a pleasant environment.

Project Objectives:

To build a complete MicroDairy, including required equipment, that meets regulations. This eliminates a major obstacle to farmers beginning small-scale, on-farm processing.

To make the MircroDairy affordable, with a target cost from $40,000 to $75,000. Because it is a transportable system it could be leased (like a tractor) without a down payment.

To make the Micro Dairy economically viable. The project will demonstrate that a farm can be profitable with as few as five cows, and can reach median US farm income with ten cows or less.

By the end of the third year, 300 farmers and extension personnel and fifteen regulatory personnel will have toured the demonstration farm, and five MicroDairies will have been built based on plans developed by this project.


Click linked name(s) to expand/collapse or show everyone's info
  • Jim Dell
  • Carl Erikson
  • Stanley Fultz
  • Judith Kipe-Nolt
  • Don Schwartz
  • Bill Zepp


Materials and methods:

In consultation with regulatory team members, other regulatory personnel, extension personnel, agricultural experts (including farmers) and manufacturing team members and other manufacturing experts a MicroDairy trailer was designed to meet the requirements of the Pasteurized Milk Ordinance. Significant research was undertaken to identify available, commercially produced, small-scale dairy processing equipment. Some satisfactory equipment was found and purchased including items such as a batch ice cream freezer and a cream separator. We were not able to identify a small-scale vat pasteurizer/cheese vat or flexible packaging equipment that met our requirements in terms of batch sizes, flexibility and affordability. In consultation with regulatory personnel and manufacturing team members and other experts, a very innovative batch pasteurizer and mechanical bottle filler/capper were designed.

An existing farm that had not been in commercial agricultural use for decades was fitted up to allow dairy farming utilizing management intensive grazing techniques. Fences were installed, pasture was renovated, animal housing facilities upgraded and a small herd of four Jersey cows was purchased. Regulatory requirements were addressed in areas such as preparing a nutrient management plan. Zoning issues needed to be addressed because the MicroDairy designed for the project was classified by local planning and zoning staff as a food processing plant and not as an agricultural use. This turned out to be the most challenging (and time consuming) part of the project.

The prototype MicroDairy trailer and required equipment were manufactured and tested. Some of the testing had to be done at other farm locations due to delays resulting from the zoning issues.

CAD drawings and Requests For Quotation were prepared and sent to three manufacturers to obtain estimates of manufactured costs to verify the affordability of the equipment. In addition to the full-scale trailer proposed for this project, a small-scale processing-room-only-trailer was designed and Requests for Quotation submitted to the three manufacturers. The processing-room-only-trailer would be especially attractive to existing dairy farmers who already had approved milking facilities. A special advantage of this trailer unit is that it would allow the processing facility and equipment to be shared by several farmers. Further, since it is mobile, it would be considered farm equipment and not subject to many of the zoning issues and restrictions that delayed this project and significantly increased the costs.

Research results and discussion:

We have designed and built a MicroDairy trailer that includes all of the facilities and equipment necessary to milk cows (or goats and sheep), store the milk, process the milk into commercially viable products and sell the products on the farm.

The vat pasteurizer that we designed has been approved by state regulatory personnel and is both functional and affordable. It can be used as a pasteurizer, cheese vat, yogurt bath and small bulk tank.

Participation Summary


Educational approach:

Farmers, extension and regulatory personnel have toured the facility. Additional tours available by appointment. Several Spring Open Houses are planned for 2005.

The MicroDairy Vat Pasteurizer was used for demonstration and training purposes at a pasteurizer training seminar conducted by USDA for regulatory agencies. Regulators and students hadreal curiosity and a very positive response. There are very few vat pasteurizers in commercial operation so it is difficult for instructors to find training opportunities. The instructors for the course appreciated our assistance.

MicroDairy layouts/floor plans are available by request from the project coordinator. Several prospective farmers have found these to be quite useful for planning efficient space utilization of their facilities.

No milestones

Project Outcomes

Impacts of Results/Outcomes

The MicroDairy and associated equipment has been built. The system works effectively to manufacture commercially acceptable dairy products. Based on our RFQ process we are confident that this equipment can be manufactured at prices that are within the targets originally set forth in the project.
The project coordinator has assisted 5 individuals in developing feasibility plans and facility layouts based on the MicroDairy concepts.

234 people including farmers, prospective farmers, regulatory personnel have either toured the facility or had some of the equipment demonstrated for them at seminars and other farm tours. This includes several visitors from foreign/developing countries who are interested in incubating small-scale dairy projects.
Without advertising of any kind we have collected a list of 65 individuals interested in possibly starting their own MicroDairies.
5 MicroDairy vat pasteurizers have been ordered and 1 has been installed at a small goat dairy.
The project coordinator has received requests to design poultry and beef processing facilities using concepts developed in building the MicroDairy. These requests will not be acted upon until this project is completed and is self-sustaining.

Although the delays mentioned before have not allowed us to complete the detailed economic analysis of the small scale dairy operation we believe that with some modifications to our original proposal we will be able in the near future to demonstrate economic sustainability. To that end, the project coordinator has invested significant additional funds and is committed to continuing to develop the farming operation beyond the end of this specific project.

Economic Analysis

This project demonstrates that it is possible to design a facility that can be manufactured and delivered to a farm. The facility can meet the requirements of the Pasteurized Milk Ordinance (PMO) and thereby make it much easier for an existing or prospective farmer to begin operation. This project has made a major contribution by providing a roadmap to guide farmers through this process. In undertaking this project, we also identified many of the challenges, pitfalls and potential problems that confront an individual who wishes to be involved in small-scale dairy farming. We are excited that this project was able to provide solutions to many of these challenges and will continue to function in and educational and mentoring role into the future.

When this project began our focus was on meeting the requirements of the PMO and we thought that this would be the most challenging part of the project. Due to outstanding cooperation of regulatory and extension personnel in Maryland and Pennsylvania, this turned out to be easier than it could have been. On the other hand, we focused too little attention on local zoning, permitting, water use and health department regulations. These turned out to cause major delays and significant additional expense. We are required to obtain 34 different permits and inspection certificates before beginning operation.

The MicroDairy trailer is affordable. Following are the RFQ results for the MicroDairy trailer including milking parlor, milking system, milkhouse, office, restroom, processing room, pasteurizer/cheese vat, packaging equipment, cream separator, ice cream freezer, milk pumps, retail sales area, HVAC systems, water heater, vacuum pump, electrical panels, refrigerator and freezer. Walls and roof are all insulated, floor is textured stainless steel.

Company A Quote - $72,000

Company B Quote - $76,000

Company C Quote - $94,000

Since there may be a broader application for a processing-room-only-trailer we requested quotes on that system including custom trailer, water heater, HVAC system, electrical subpanel, pasteurizer/cheese vat, packaging equipment and cream separator.

Company A Quote - $44,000

Company B Quote - $48,000

Company C Quote - $40,000

Farmer Adoption

Statistics are included in other sections of this report

Areas needing additional study

A small, inexpensive HTST pasteurizer would be very beneficial in many operations that do not require a vat pasteurizer. While there are no units like this that are commercially available on this scale, we believe that one could and should be developed.

An attempt should be made to design and package a processing system in such a way that it does not come under local zoning ordinances or at least reduces the exposure to these ordinances.
We wish to acknowledge the strong financial support, encouragement and cooperation of SARE and the NESARE staff that we worked with. This project would never have happened without this support. This project also benefited from the numerous grazing, small dairy, value added marketing and similar programs that were previously funded by SARE. We truly “stood on the shoulders of giants”. This type of program should be continued.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.