commercial dairy goat farms

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Commercial Dairy Goat Farm in VermontFocusing on the Numbers

AuthorsJordan Le Roux, Vermont Butter and Cheese CompanyGlenn Rogers, UVM Extension


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Acknowledgements

The authors acknowledge help from the following persons who are involved with the goat farm business in Vermont at varying levels.

The authors would like to thank Carol Delaney who participated in bringing her knowledge onVermont dairy goat business and beyond Vermont.

Thanks to Daniel. L. Scruton from the Vermont Agency of Agriculture and John Porter fromUniversity of New Hampshire Cooperative Extension.

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The authors would like to thank the local producers who have shared their financial information,and to local builders, suppliers and other professionals who assisted with backgroundinformation.


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Table of Contents

I ABSTRACT.............................................................................................................. 1

II INTRODUCTION...................................................................................................... 2

III ASSUMPTIONS ....................................................................................................... 3

1. Size Operations.......................................................................................................................3

2. A Few Numbers- Herd Management ...................................................................................3

3. Example...................................................................................................................................5

4. Herd Management..................................................................................................................5 A. General .................................................................................................................................5

B. Breeding period ....................................................................................................................6C. Kids ......................................................................................................................................6 D. Out of Season .......................................................................................................................6 E. Summary ..............................................................................................................................7

5. Assets .......................................................................................................................................7 A. Land......................................................................................................................................7 B. Buildings ..............................................................................................................................7C. Equipment ............................................................................................................................9 D. Milking Parlor & Equipment................................................................................................9 E. Livestock ............................................................................................................................10

F. Summary ............................................................................................................................10

IV INCOME SOURCES .............................................................................................. 12

1. Milk Sales..............................................................................................................................12 A. Vermont Butter and Cheese Company Milk Price.............................................................12 B. Assumptions.......................................................................................................................12C. Milk Income .......................................................................................................................13

2. Animal Sales..........................................................................................................................13

3. Other Sources of Incomes....................................................................................................14 A. Directly from the goat operation ........................................................................................14 B. Other Income......................................................................................................................14

V EXPENSES CATEGORIES ................................................................................... 16

1. Feeding Program and Costs ................................................................................................16 A. Presentation ........................................................................................................................16

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B. The French System.............................................................................................................16C. Feed rations ........................................................................................................................17 D. Feedstock............................................................................................................................20 E. Feed costs ...........................................................................................................................21F. Summary ............................................................................................................................23

2. Bedding..................................................................................................................................23

3. Vaccination and Health Care..............................................................................................24

4. Dairy Herd Improvement Association (DHIA) .................................................................26 A. General ...............................................................................................................................26 B. DHIA Monthly Cost...........................................................................................................26

5. Hauling Costs........................................................................................................................26

6. Hired labor............................................................................................................................27

7. Supplies and Miscellaneous.................................................................................................27

8. Diesel, Fuels and Lube ......................................................................................................... 28

9. Utilities...................................................................................................................................28

10. Repairs and Maintenance................................................................................................29

11. Taxes..................................................................................................................................29

12. Interest and Principal ...................................................................................................... 29

VI CASH FLOW SHEETS .......................................................................................... 31

VII DISCUSSION ..................................................................................................... 35

VIII CONCLUSION.................................................................................................... 37

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I Abstract

The Vermont dairy goat business is not as important to Vermont Agriculture compared to dairycow farms. In fact, with approximately 30 dairy goat farms for more than 1,100 dairy cow farms,it might seem minuscule. However, it is a growing business and a study has been conducted tofigure out what are the costs to produce and ship goat milk to Vermont Butter and CheeseCompany. Although dairy goat farms data are not numerous but thanks to five farms located inVermont and published studies (mainly French), these budgets have been built.This document contains various assumptions concerning assets and herd management programswhich allows one to approach the cost of production for three different sizes of farm (100, 200and 400 goats) including three feed ration program variables.In this study, a 100 goat operation is not sufficient to allow for a living income for a familywithout any off farm income. In fact there exists a negative cash flow of $518 and $2,109 for tworegimens and positive cash flow of $1,500 for a 100 goat operation. The variation is largely dueto differing feeding regimens.200 and 400 goat operations are able to produce a family living. A 200 goat operation will have$11,763 - $19,535 net cash flow depending on feeding regimens. A 400 goat dairy farm, withadditional outside labor, has $11,068 - $27,718 net family income.

All examples are purchased feed rations and pasture and haying programs may provide costsavings on individual farms. Moreover, the incomes in those scenarios are performed by milk andanimal sales only, thus it is highly possible that having other farm incomes will enhance net farmincome depending on your situation.

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II Introduction

Dairy farming is well developed in the State of Vermont with more than 1,100 bovine farms and145,000 cows. While sheep and goats dairies are small in number (approximately 40-50 in 2005)the market seems to indicate room for growth. Given the current lack of goat milk supply forVermont Butter and Cheese Company, this led to the development of a cost study on dairy goatfarm.Overall, management is the most important factor to the success of the farm. This includes allaspects of crop management, goat dairy management, labor management and financialmanagement. As a part of that management producers should understand the costs and returns oftheir operation and enterprise budgeting is helpful for making decisions either in short or/andlong term.This paper includes the cost of production for three different size and three feeding regimens fordairy goat farms. Examples of 100, 200 and 400 dairy goat operations have been chosen asrealistic dairy goat farm sizes, each with three different feeding programs. These theoreticalfarms are set up with unproductive land (no crop and hay) therefore; in this study, all feed is purchased. Your operation may be able to utilize pasture or make hay as a more efficient sourceof spring, summer and fall feed.This document allows one to compare current dairy goat farms and/or to help farmers and otherinstitutions to build dairy goat farm financial budgets.

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III Assumptions

The figures presented here are calculated based on average figures on general management froma wide range of data coming from the field. Thus, the numbers below presume good management practices but are at the same time realistic for a commercial operation.

1. Size Operations

Three different size operations are chosen to show what income possibilities are but it does notmean it will be yours. Your choice again depends on your living costs, income goals, availablelabor, capital investment, and numerous other factors. Those factors must be calculated in acompleted precise business plan before going into the commercial goat business.The following assumptions have been applied for each size of farm enclosed in this document.The sizes chosen are 100, 200 and 400 goats. Given the aim of this document, (to have a glance

of what is the revenue for each farm size), we have considered a 100 dairy goat operation as areasonable starting size for commercial dairy farm. The two hundred goat farm has been taken because a couple can manage 200 goats. However, beyond this limit often requires additionaloutside labor. Thus, we have included a 400 goat dairy to evaluate the profitability of that sizegoat dairy managed by a couple plus one employee. Although many factors utilize data from onesize operation to another, individual size variations are expected. For example: to go from 100 to200 goats the number of bucks double but freight & trucking, bedding & real estate tax costs donot double. Other costs may more than double due to added building size and added debt vs.utilization of older existing facilities.

2. A Few Numbers- Herd Management

All female goats in a herd are not productive for the entire year due to disease problems, non-fertility, dry periods, and other factors. In this paper, we assume that 92% of goats give birth at a1.7 kidding rate per goat. Moreover, even though a goat generally gives birth to two kids, a ratioof 1.7 kid per goat is realistic over the life of the operation. A french study used a 1.7 conceptionrate for an adult goat and 92% conception rate (S’Installer en Elevage Caprin, Institut del’Elevage Poitou-Charentes, February 2001). For the whole herd including the unproductivegoats, the conception rate goes down to 1.56 kids per goat [(92 X 1.7) /100]. However, it isimportant to note that not all mature goats will kid as some just will not conceive, will not kid properly, or will have other metabolic and disease issues. Thus, do not expect 100 goats to kideach year.

A replacement rate of 25% is used to improve the genetics’ herd potential and to avoid healthissues linked to old goats. That would mean the herd is entirely replaced every 4 years. However,french studies show that the replacement rate varies from 10% to more than 40% of the herd. Theaverage rate in France for the farms that ship fluid milk is about 38%. (Institut de l’élevage,February 2005. http://www.inst-elevage.asso.fr/html1/IMG/pdf/1369-Result_techn-eco_atel_capr_lait_et_from.pdf). Although we could use a 30 – 35% replacement rate it would

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3. Example

Here an example of a 400 goat operation

4. Herd Management

40 Bucks 13 Cull Bucks

400 Does

560 Kids

368 Productive Goats

100 Cull Does

460 Kids Sold

100 ReplacementKids

460 Kids Sold(180 female, 280

male)

100 Cull Does

626,500 lbs Milk

Annual Sales

13 Cull Bucks

A. General

The natural breeding season for does is August to December (stimulated by decreasing daylight)thus most kidding is from January to June. Artificially increasing daylight during December thruMarch-April will simulate the goats and breeding will take place during the spring thereforekidding period will be off-season (fall-winter) thus allowing the farm to produce milk yeararound at consistent levels. Does are bred in-season (August-December) and out of season(March to June) primarily because of a better repartition of work and an advantageous milk priceduring off-season. Kids are born five months after breeding. An estimated 10% kid loss isassumed. Does are bred at an optimal size at 7 – 9 months of age, thus kidding at 12 – 14 months

of age. However, this depends on the growth and health of the kids to doeling breeding andkidding age. Female kids are generally weaned at two and half months of age, however this againdepends on the growth and health of the kids.Breeding management is essential to predict kidding days and to maintain milk production forextended periods of time.In this paper, it is assumed that the dairy goat farm sells all milk to Vermont Butter and Cheese.

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B. Breeding period

The bucks replacement rate is 32% meaning that buck’s life on the farm would be 3 years. It is better to have quick turnover in bucks to increase herd genetics and consequently milk protein,and butterfat rates. Bucks replacement rate can be as high as every 2 years and artificial

insemination can also be used to increase the genetic potential of the herd. Doelings are bred ifand only if when they reach 65-75 lbs weight as well as having excellent growth and having highdairy characteristics. The 8 months of age is used as a reference to reach the 65-75 lbs weight(PEP Caprin, L’élevage des chevrettes).

C. Kids

Goats to be bred are chosen by the future of their babies, they choose the babies in term of themilk productivity and the goat’s history (difficulty to kid, hoof problems, milk quality…)The kids unsuitable for replacement are sold early to avoid increased rearing costs. However,raising kids for breeding stock can be an alternative as an additional source of income.

D. Out of Season

Out of season breeding, for fall kidding, allows one to benefit from the higher winter milk price.This technique is further described in the “Out of Season Breeding” (Available at Vermont Butterand Cheese Company)

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E. Summary

Operation Duration Period

Feeding program 12months Year around

Breeding 6 months Aug – Dec

Breeding out of season 4 months March – Jun

Kidding12

monthsYear around

Weaning12

monthsYear around

Milk production12

monthsYear around

5. Assets

Assets are an important part on your farm and including land (including fields and pastures), buildings, equipment, livestock and other depreciable items with useable life over one year.In this paper, the assets contain land (including small outdoor exercise lots), buildings, milkingand milk house equipment, livestock and one medium sized tractor (50 – 60 HP).The value of assets on the five interviewed farms were not entirely available. However, we didapproximate the land, buildings, equipment, and livestock that reflected actual Vermont values.

A. Land

This study utilized all purchased feed as Vermont dairy goat farms are mostly confined (goatsstay mainly in the barn) and secondly, it is easier to predict total feed cost.However, one may use partial budgets to determine the profitability of raising and harvesting thefeed on your farm as well as utilizing pasture to reduce feed costs.In this paper, we assumed that one hundred goats operation is on 15 acres with five additionalacres per 100 additional goats. Thus 20 acres for 200 goats and 30 acres for 400 animals. Weused this as often the farmer’s house and surrounding buildings are part of the farm property. Weused the farmstead site as two acres. Consequently, for each farm, two acres are deducted for thefarmstead area. Only the house is taxed at full value. All other property is assumed to be in the

“Vermont Use Value/Current Use Program and taxed accordingly.

B. Buildings

There are many types of barns and housing for goats. Barns for goats can be adapted from oldcow barns, or can be a new construction or a rental operation. Therefore, the value of buildingshas been done by consulting companies that build housing for livestock. We started by taking

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into consideration goat requirements (square footage, air and feeder space) and estimated the costfor a new barn. Obviously, you may be in a different position, have already barns and may need

he goat requirements used in this paper are:

Housing R ents

to adapt them for goats.T

equirem

Doeling Unit 1Space per Doeling Square foot 10.7

Bunkline Space per Doeling 0.25Meter

Alley Way Meter 2

Kids

Space per Kid Square foot 2.7 to 3.6

The total animal space is 20% higher because of the animal flows. In fact, during the year, certain periods are much more intense than others. For example, kidding periods create additional space

ey

nd feed alley. Values of

. For more details on how to assess the building size for yourerd, go onto the appendix section.

of the

nd

under estimate how critical this factor is to the overall health ofthe animal and to the operator.

Housing R ments Exampleequire

Goat Unit 100

Animals Added (20%) Head 120

Air per Goat Cubic Foot 247

Space per Goat Square Foot 20

Bunkline Space per Goat Foot 1.1

Alley Space per Goat Foot 6.56

for short periods of time.Minimum feed alley width in this case is 2 meters wide, (6.56 feet). The size of the feed alley

depends on the type of feeding mechanism. (tractor or by hand), additional use of the all(storing equipment), and the type of feed (round bale, small square bale, or large square bale).Generally, the cost per square foot for building a barn goes from $15 to $40. John Porter,University of New Hampshire Extension, gives a cost at $20 to $25 per square foot for a pole barn. A goat needs from 15 to 40 square feet including space exercise athe buildings assume a 20% Lost Capital and a useable life of 20 years.For each farm, we assume three buildings that house lactating and dry does; yearlings and kids;and one for bucks. For the 400 goat operation, we assumed four barns with two barns forlactating and dry does. Barn sizes and the explanations on how the barn size has been calculatedare presented in the appendix sectionh

A note to the reader about buildings: Ventilation is keenly important to the healthdoe, the buck and the kids in a dairy goat operation. Proper ventilation can lead to high production levels, decreased sickness, and excellent growth and high vigor rates. However, theopposite is true and can lead to higher vet costs, slower kid growth, lower milk production, aother issues. Thus you need to evaluate this closely when modifying old buildings or when putting in new buildings. Do not

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The main elements to take into consideration related to ventilation are: temperature, moisture andthe amount of ammonia in the air.

Temperature

Goats will survive in cold weather but only when it is introduced over a period of time. Abrupt

variations will change humidity levels, leading to condensation on the buildings, as well asBuilding optimum temperatures are 10-12°C (50-53.6 °F), by avoiding sudden differences.Maximum temperature is about 27°C (80.6°F) as possible as you can and a minimum would besimply to avoid frozen water and goats need to eat more.

Moisture

A goat lost 1.2 to 1.5 liter per day (40-50 Oz) and adding the urine from the bedding. It isrecommended to do not pass the 80% of moisture. The optimum hygrometric measure would be70 to 75%.

Ventilation

A goat needs at least 5 to 6 cubic meter of air (177 to 212 cubic foot).Air should be renewed during winters about 30 m3 per hour per goat (1060 cubic foot) andduring summers about 120 to 150 m3 per hour and per goat (4238 to 5298 cubic foot). Giventhese recommendations come from France, Vermont winters are colder and the air renew would be less. However, an air renew still have to be performed in order to avoid respiratory issues.Those recommendations have to be adapted at each situation because building layout andventilation system (static or dynamic) play significant roles on in-house ventilation.

C. Equipment

Minimal equipment is needed on a dairy goat farm with no use of the land. Equipment needed ismilking machine and a tractor with bucket loader. The tractor with a bucket loader is used to haulhay, haylage, feed and/or corn silage, move manure and other activities. The used small tractor onthe 100 and 200 goat operation has a $12,000 value for the first two example farms while the 400goat operation has a tractor valued at $50,000. (It is important to remember that you must washthe tractor and especially the bucket between moving manure and then using the tractor forfeeding purposes).

D. Milking Parlor & Equipment

According to the herd size, we assume each has a different size of milking parlor.The value of the milking center depends on several factors, including the bulk tank size, type ofmilking parlor (Herringbone, Straight-through, Parallel, Rotary), number of stanchions andothers.The type of the milking parlors has to be chosen according to the housing layouts, herd size, laboravailability, time of milking (goats/hour), capital investment and expansions planned, distributionof feed or not and animals flows. These factors have to be taken into consideration without losingsight of the main targets of high quality milk and a milking parlor adapted to the milk handler.

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The milking equipment contains bulk tank, milking machine with the claws, vacuum pumps,stainless steel pipelines, hot dipped galvanized parlors along with the associated milk house sink,hot water tank and miscellaneous items. The size of the milking parlor changes relative to theherd size. Therefore, we assumed that for 100 goats, a double four or single 8 goat parlor; for 200goats, a double 8 parlor, and for 400 goats, a double 12 is necessary. For more details, go onto

appendix and find the explanations for the “Other Equipment” line. When planning a goatoperation it is wise to consider potential expansion to a larger size even though you may notexpand to that size. This consideration will allow one to evaluate the practicality and profitabilityof various pieces of milking parlors and equipment.

100 200 400

Double 4 or single 8 hotdipped galvanized goatparlor

$ 2,600Double 8 hot dippedgalvanized goat parlor

$ 5,200Double 12 hotdipped galvanizedgoat parlor

$ 7,900

500 gallon used bulk tank $ 3,5001 000 gallons used bulktank

$ 7,0002 000 gallon usedbulk tank

$ 14,000

Other milking equipment $ 6,810 Other milkingequipment $ 10 400 Other milkingequipment $ 12,440

Total Cost $ 14,210 $ 25,300 $ 34,300

Bulk tank size varies by the number of goats milked each day, goat milk production and milkstorage time 2 – 4 days. The milk room size must meet Vermont state inspection standardsalthough it is recommended at least 200 square feet unless you are “bulkheading” the tank to theoutside.

E. Livestock

In this paper, a goat has a value of $150, a yearling of $100 and a buck of $200. Consequently, a100 goat farm will have 100 goats at $150 each, 10 bucks at $200 each and 25 yearlings at $100each, with a total herd value of $19,500. Thus, the 200 goat farm has a $39,000 livestock capitaland the 400 goat farm has $78,000 invested in livestock. Unfortunately, only two farmers in ourstudy had this critical information and we had to rely on averages. The value of each category ofanimals must be assessed by the individual performance, data and genetics.

F. Summary

Unit Farm 1 Farm 2 Farm 3Land Acre 15 20 30

$ $65,000 $90,000 $165,000

Buildings $ $85,500 $118,000 $199,000

Equipment $ $24,910 $34,600 $84,300

Livestock $ $19,500 $39,000 $78,000

Total Assets $ $194,910 $281,600 $526,300

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The assumptions above are very important and further explanations will allow you to understandhow and where we came to our numbers. The above assumptions are references that a dairy goatfarmer should reach; it does not mean that it is the ideal farm. Assumptions come from frenchstudies whereas the actual numbers are from Vermont dairy goat farms and applied to the three

sample farms.Again, this document should be used as a guideline to compare your current existing farm or giveyou an idea on what numbers must be taking into consideration. You need to apply your situationto the sample farms to improve your operation.

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IV Income Sources

1. Milk Sales

A. Vermont Butter and Cheese Company Milk Price

In the Vermont Butter and Cheese Company agreement signed between VBCC and the “samplefarmers” in this study the milk pricing is calculated as:“Payment to the Producer for milk purchased by Vermont Butter and Cheese Company will be bi-weekly with the applicable quality bonuses being paid after the end of each month. Current pricing formula recognizes two payment periods: 1. Quota and 2. Over Quota periods. TheQuota Milk is considered as the total of all pound of milk protein lbs. per week with pickupsmade between October 1st through January 31st (17 weeks) or November 1st through February28th (16 weeks) or November 1st through March 31st (22 weeks) whichever is the highest weekly

average number. Milk purchased during this period is rated in 2006 at $11.50 per pound of protein up to the limit set by the Quota Period, and $9.00 per pound of protein beyond the Quotalimit.”Please note that there are 17 weeks between October and January and 16 weeks between November and February but 22 weeks between November and March. Thus, the weekly production must be calculated to determine the highest weekly average milk protein lbs. production for the quota period. These prices are subject to change as the goat milk marketchanges.

B. Assumptions

In these farms, the milking goats produce 1,700 lbs of milk per year. This means a 5.6 lb/dayaverage for a lactating goat producing for 300-day or 6.8 lbs/day for 250-day lactation. Weassumed that the average protein level is 3.34% for all the year within a range of 2.9% to 3.7%and the butterfat level is 3.64% within a range from 3.3% to 4.25%. These calculations are basedon an average of all the farms that shipped their milk, in 2005, to Vermont Butter and CheeseCompany. The over-quota protein level has been calculated by taking a year similar to 2006.A bonus is paid for milk quality, depending on raw bacteria count, somatic cells count, preliminary incubation count and laboratory pasteurized count.In this scenario, we assumed that each month the quality milk reached “Level Two” meaning$3.45 per hundredweight, which corresponds to about 10% of the milk income. For the currentdairy goat farms, some reach $5.00 per hundredweight, some have no income and few get penalties since they are beyond the regulation limits (Grade “A” Pasteurized Milk Ordinance).Moreover, a winter premium is given at $0.50 per hundredweight from October through January.This winter premium is included in the bonus.For more details, go to the appendix section.

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C. Milk Income

Milk income Unit Herd size

100 200 400

Milk production Lbs 156,400 312,800 625,600

Incomes $ $ 54,866 $ 109,733 $ 219,466

Bonus $ $ 6,261 $ 12,523 $ 25,046

Total Incomes $ $ 61,128 $ 122,256 $ 244,512

The total income per goat is $611 and per hundredweight is $39.10 for any farm size.

2. Animal Sales

In Vermont, dairy goat farmers sell their cull does, bucks, and goat kids to different locations.

Goats can be sold to a cooperative that raise kids until 2 or 3 months old, to another dairy goatfarm which wants to increase its herd, to an auction broker or other coop, or to a retailer. Themeat goat market fluctuates every season depending mainly on the ethnic events thus we utilizeda lower than average price to take into consideration the range in prices that may occur with theseasonal fluctuation.Typically, goat kids are sold at one week old, and cull animals are sold as needed, thus incomefrom selling animals is not significant compared to milk income and are not the aim of a dairygoat farm. In this paper, we used the following prices: $8 per kid, $64 per doe culled and $100 per buck. These prices have been reported from farms which sell goats to others and animal buyers in Vermont.Selling animals income:

100 200 400 Animal Rate

Quantity Income Quantity Income Quantity Income

Kids $8.00 116 $ 928 230 $ 1,840 460 $ 3,680

Cull animals $64.00 25 $ 1,600 50 $ 3,200 100 $ 6,400

Bucks $100.00 3 $ 300 7 $ 700 13 $ 1,300

Total Incomes $ 2,828 $ 5,740 $ 11,380

These numbers may be underestimated because of the market trend. In fact, during the ethnic and/or religious events (Eastern, Christmas, Aid al Fitr…), the meat market is much stronger and theincomes may be more important. Note that by breeding out of season fall kids can be good candidates for Christmas holidays when prices are stronger. Both of these goat dairy animal markets should be considered when planninga goat dairy operation.For more information on the goat meat market www.sheepgoatmarketing.info is a USDA-funded project to improve the marketing infrastructure for goat and sheep producers.However, if you already know someone who is ready to pay more or less, in the appendix sectiona table shows different levels of income depending on the market price.

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Raising breeding stock is a possible way to increase income. A partial budget might be useful toshow the profitability or not of raising. Selling breeding stock can be cost-effective andconsequently a good source of income if records and goats are excellent. Breeding stock can besold at $400 or more each. This can be significant if kids are available for sale. At a 25% cull rateand a 1.56 kidding rate per doe per year there will be excess kids for sale or “internal growth” of

the goat herd. However, during some years one may find that the culling rate on the goat herdmay increase to 30% or 35% for a variety of reasons. Unlike the bovine industry, this increase incull rate may not significantly affect the net cash flow on the small goat herd as this percentageincome change on cull goat income and kid income is not significant compared to the overalloperational income and costs. It should be remembered that keeping cull rates low allows one tosell more high quality replacement kids and increase the goat herd but the genetic and production potential of the herd may not increase as rapidly as with a high cull rate herd.

3. Other Sources of Incomes

Depending on your current or future situation, other related or diversified activities can increase

your gross income.

A. Directly from the goat operation

Income coming directly from goats: Goats manure is more a cost than a revenue but processingthis manure into compost and sold to the public may be a profitable venture in an urban or otherniche market. Semen from bucks with high genetic potential can be sold, again that depends on buck’s performances and long-term dairy production records from the herd are essential to enterinto this market. Processed milk (cheese, bottled milk, and other products) from the farm and intothe retail market has not been taken into consideration because in this paper, all milk production

is sold to Vermont Butter and Cheese Company. Processing milk on the farm is another businessand needs much more investment, knowledge, product storage, and marketing expertise. Inaddition, retailing the milk and other products can be advantageous but it requires extensive business and marketing knowledge and experience.

B. Other Income

There are several other sources of income including: selling crops, maple syrup sales, forestrysales, and governmental payments among others. Governmental program can come from NaturalResources Conservation Service (Conservation Security Program, Conservation ReserveProgram…) or other institutions (such as: Farm Service Agency and VT Agency of

Agriculture…) thus allowing you to have income from the federal Government and the stateunder certain conditions.Do not underestimate the value of government programs because participating in government programs has been shown to help farm income significantly. Federally sponsored programs suchas: EQIP (Environmental Quality Incentive Program), CRP (Conservation Reserve Program),CSP (Conservation Security Program) and state sponsored programs which help match statefunds with those federal programs are available at some level for nearly all landowners andagricultural producers in Vermont. There are restrictions, cost share requirements, and limitations

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for each program. For more information, contact your local Farm Service Agency office and theAgency of Agriculture to determine which programs you may qualify for.

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V Expenses Categories

1. Feeding Program and Costs

A. Presentation

Feed is the largest part of the production cost and different feed rations are proposed based on300 productive days and a 65 day dry period.A 150 lb. milk producing goat ingests approximately 1,000 kg (2,200 pds) of dry matter a yeardepending on the feeding system. Feed rations presented here are examples but notrecommendations. Each farmer should evaluate the nutritional value of the feed, their goats, theirfeeding systems and other variables and then develop their own feeding regimen. For this paperwe adjusted feed possibilities to include corn silage, hay and haylage. We have avoided the use ofdehydrated alfalfa pellets although they are commonly used in France to feed goats. The price of

this feed in Vermont was prohibitive at the time of this paper for the Vermont dairy goatoperation. Unfortunately, the French feed calculation system can not be used in North Americaand the methods of calculation and units cannot be used in North America. However, feedquantities ingested by goats are the same as in France. We also know that there is a widevariation of feeding regimens thus that is why we propose three different rations. Feed rations below were made by personnel working at Institut de l’Elevage in France. In addition, there may be much to be learned from the French system (along with modifications from that system) toefficiently feed dairy goats which could lead to higher production in your herd.

B. The French System

The French calculation system differentiates, for a yearly production cycle, five stages that aredefined mainly by the lactation and pregnancy stages therefore by the needs in energy and proteinas well as dry matter needs.These five stages are:

i. Start of lactation

During this 30 – 60 day period, milk production is high. Energy needs typically cannot be balanced by only the ration, thus the body reserves are used. However, a high level of energy hasto be provided to goats. Protein needs can typically be met by feeding high quality grains. Dry

Matter Intake (DMI) may not be sufficient as well.

ii. Core of lactation

From the second – seventh month of lactation, milk production decreases and feed intakeincreases thus the rations ingested tend to equal the body and lactation needs. The DMI is highestduring this period.

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iii. End of lactation

This consists in preparing for the dry period therefore changing and decreasing slowly theamount of feed but not the nutrient concentration of the feed.

Pregnant goats are fed with the best quality forage for the following two stages, which are:

iv. 4th Month of Gestation (1st – 30th day of dry period, and one month prior tokidding)

The 4th

month of gestation has to aim to decrease the energy contained in the feed ration becausethe milk production is zero and it is preferable to not fatten goats during the dry period.

v. End of Gestation (30th to 60th day of dry period)

The energy contained in the feed ration is increased to cover the pregnancy’s needs and to prepare the goat for the following lactation. The first two months of lactation demand a lot ofenergy as well as calcium in the goats’ milk.

C. Feed rations

The “Dairy Goat Pellet” is a commercial purchased grain. It typically consists largely of corn,soybean, and wheat products. This feed typically has 16 - 20% protein and 78 - 84 Mcal/lb of NEL (Net Energy-Lactation).

i. Ration 1: “Corn silage ration”

Milk Production: 1,700 lbs per Goat per Year.

Start ofLactation

Ration

Core of LactationRation

End ofLactation

Ration

4th month ofGestation

Ration

End ofGestation

Ration

Months 2 6 2 1 1

Dairy Goat Pellet 1.54 1.32 1.10 0.88 1.32

Corn Silage 3.08 2.64 2.20 0.00 0.00

Hay (grass) 2.20 2.20 2.20 3.96 3.96

Quantity in lbs per day. Corn silage and concentrate in lbs of dry matter whereas Grass hay is on an as fed basis.

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Weaning time advised by Langston University is at 4 months of age whereas, In France, an eight-week weaning (P.E.P Caprin, L’élevage des chevrettes) can be performed under certain weight

e keys to early weaning is to have high quality water, hay and concentrate available at

rowth is important and a good quality feed should be

r optimum consumption. Moreover, at this particular age, the risk ofxcess concentrate ingestion is reduced.

Therefore, we assumed that a 2.5-month-old age is the weaning period and the breeding periodshould be at 7 to 8 months.

gain conditions. Kids must reach 20 lbs weight by one month of age and 26 lbs. at two months ofage with proper body growth as well. This objective must be reached to breed goats at seven

months old.One of ththe earliest possible date (1 – 2 weeks of age). However, this balancing act of having high qualityfeed at early age must be balanced with providing high quality milk replacer at the amountsneeded.From weaning to 4 months old, body gavailable. By 4 months of age, replacement kids should be grouped by the bodyweight and is agood way to provide feed foe

Feeding program

Animal StageNumber of

DayWeight

CQuantity

(O )

MilkReplacer Fed

(

Feed per day(Lbs)

Hay s)olostrum

z Oz)(Lb

All kids 20 ozFrom one to three days

old3

All kids From 3 to 7 days old 4 40

From 1 week to 2 weekold

7 40 0.4 1.8

From two week to twomonth old

451month = 20

lbs48 0.4 1.8

From 2 to 2.5 month 15 32 0.4 1.8

From weaning to 4 monthold

45 At least 26 lbs 0 0.9 2.4

From 4 to 7 month old 90 0 1.1 2.9

Kidsreplacement

7 - 8 month old (breedingperiod)

30 At least 65-75

lbs0 1.3 3.1

For ease of calculations, we assumed that kids are fed only milk replacer. Farmers use half milk

the first three

the first seven days after kidding is not sold to anycreamery thus colostrum and milk is feed to the new kids up to seven days of age.In this study, we used a full milk replacer feeding program for the new goat kids on the threesample farm sizes included in this study.

replacer, half goat milk, to decrease the cost of feeding animals. Goat’s milk that cannot be

shipped to Vermont Butter and Cheese because of the colostrum to be given duringdays of life can be stored in the freezer and given after a heat treatment (CAEV disease).Remark: In France, goat’s milk within

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D. Feedstock

To calculate the total feed needed per year per ration type, we need to consider consumption andfeed waste per year. This waste of corn silage and hay is due to quality, feed selection, and otherfactors. Forages (grass & alfalfa hay) losses amount to 15%. However, some of this waste can be

re-used as bedding. Corn Silage losses are generally 10% or more. (La Chèvre, 1991). However,we did not calculate any grain rejection.

i. Ration 1

Feedstock (US Ton)Total

Consumption(Lbs/goat/year)

100 200 400

Dairy Goat Pellet 468 23.4 46.8 93.7

Corn Silage 2510 126.6 276.1 552.1

Hay (grass) 910 48.2 104.7 209.3

Total 3888 198.2 427.6 855.2

ii. Ration 2


Consumption(lbs/goat/year) 100 200 400

Dairy Goat Pellet 355 17.7 35.5 70.9

Barley 241 12.0 24.1 48.2

Corn 261 13.1 26.1 52.2

Haylage (Grass) 442 22.1 44.2 88.3

Hay (grass) 1111 55.5 111.1 222.2

Total 2409 120.5 240.9 481.9

iii. Ration 3


Consumption(Lbs/goat/year)

100 200 400

Alfalfa Hay 950 54.6 109.3 218.6

Hay 803 46.2 92.4 167.9

Barley 576 28.8 57.6 104.6

Soybean 94 4.7 9.4 17.0

Total 2423 134.3 268.6 508.2

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E. Feed costs

Below are the prices per ton for feeds in Vermont and the surrounding states.

FeedPrice

($ / US Ton)Forages and Silages

Haylage (Grass) $50.00

Hay (grass) $150.00

Alfalfa Hay $175.00

Corn Silage $30.00

Grains

Barley $150.00

Corn $110.00

Dairy Goat Pellet $235.00

Feed prices change often and you need to calculate your own cost accordingly. The prices aboveare realistic and we obtained them by consulting UVM professors, feed companies and farmers.Obviously, your situation may be different depending on the feed availability around your farm, purchasing in large quantity, type payment plan (prepayment, cash, check, payment upondelivery, deposit, 30 days, as you can, or bank payment check), season, and market fluctuation.In general, the more you buy and the closer payment is to “cash” prior to delivery the morediscounts that are available to you.

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ii. Doelings and Kids

Kids are sold at one week old and that number of kids corresponding to 25 % of the herd size iskept at the farm for replacement.

The milk replacer and the concentrate is a commercial feed available on Vermont farms.

100 200 400

Feed Price ($) /US Ton Quantity(US Ton)

Costs($)

Quantity(US Ton)

Costs($)

Quantity(US Ton)

Costs($)

Milk replacer $3,170.00 0.37 $1,161.67 0.73 $2,323.35 1.47 $4,646.70

Hay $150.00 7.20 $1,079.48 14.39 $2,158.95 28.79 $4,317.90

Concentrate $74.43 2.60 $193.22 5.19 $386.44 10.38 $772.88

Total cost $2,434.37 $4,868.74 $9,737.48

F. Summary

100 200 400

Total Per goat Per cwt Total Per goat Per cwt Total Per goat Per cw

Ration 1 + kids $19,930 $199 $12.74 $39,860 $199 $12.74 $79,720 $199 $12.7

Ration 2 + kids $23,055 $231 $14.74 $46,109 $231 $14.74 $92,218 $231 $14.7

Ration 3 + kids $24,646 $246 $15.76 $49,291 $246 $15.76 $98,582 $246 $15.7

Feed cost may reach as high as 50% of all expenses. In this paper, we found that it goes from

34% to 46%. However, in 2005 on the five sample farms in this study, the cost went from 18% to30%. This difference may be explained by accrual adjustments such as inventorying how muchwas purchased vs. how much was fed throughout the year. To do the accrual adjustments farmersneed to take a feed inventory at the beginning and at the end of the year as well as amount spentthroughout the year. In addition, there may have been some minimal feeding outside of the barn,in exercise lots, and pastures. Decreased losses may have also attributed to this variance.Feed commodities prices fluctuate weekly and amount fed/herd throughout the year fluctuates.

2. Bedding

A goat needs about 300 kg of straw as bedding & litter per year however most Vermont farmersuse wood shavings as bedding. A survey (April 2006) shows that the price, in Vermont, for woodshavings goes from $200 to $300 per ton and the straw is more than $400 per ton. However,wood shavings availability is variable and is often an issue. Given the high price of straw ascompared to wood shavings, the latter is used for goats in Vermont and we assume that 450 kg isneeded per goat per year based on Vermont farm data available. Another source of litter is thehay waste. Wasted hay is roughly 15% of the total quantity distributed or 80 kg and most of itends up at bedding. The cost would be $25/goat/year for a 100 dairy goat operation.

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Typically, larger farms get a 10% discount on bedding costs thus the cost per goat and per year is$25 for a 100 goat operation, $22.50 for 200 goats and $20.25 for 400 goats.

Dairy Goat Farm

Goat Herd (Head) 100 200 400

Quantity (US Ton) 37 75 148Bedding Cost ($) $ 2,500 $ 4,500 $ 8,100

It is interesting to note that older information on bedding in other states show the cost of beddingmuch less than in Vermont. In fact, a New Jersey University Extension paper, published in 1996showed a study mentioning a bedding cost at $7.5 per goat ($50 per ton of straw and 330 lbs pergoat per year). The state of Pennsylvania published in 1998 showed a dairy goat budget givingthe same amount of money per goat per year. Moreover, from $2.00 to 3.00 costs per head aretaken into consideration on goat meat farm budget (University of Kentucky, MarylandCooperative Extension). However, it is recognized that shavings cost have more than doubledsince the 1990’s and one should expect these costs to be higher than in previous years. There may

be room for improvement in this cost with proper management.

3. Vaccination and Health Care

Goat health and vaccination programs differ from farm to farm and rely on historical performance at the farm but we found that a majority of people used the medicine mentioned below. No vaccination was required by the state of Vermont during the preparation of this paper, so procedures here are recommended by veterinarians in Vermont. Although animal identification isnot a law at the time of this writing, it is highly recommended and benefits of animalidentification far outweigh any minor costs for identification.

Vaccination and medicines used include CD-T vaccines (Enterotoxemia and Tetanus), rabies,foot rot, deworming and mastitis. According to the field practices, kids are vaccinated twiceagainst Enteroxemia and Tetanus. Against foot rot, kids and goats receive two shots and one shotrespectively against rabies. Goats are also dewormed three times. Total cost for vaccines was$8.50.Mastitis, one of the most costly and damaging infections for goats, (as well as cows, and everyother milk producing animal) costs $10.00 per head for treatment. We presume that mastitis willappear on every farm because of several things including environment (weather, stress, clean bedding…) and farm practices (pre-and post-dip teats, vacuum levels, changing inflations,stripping milk, …). Although the level of infection may be minimal or very high, the authorshave set at the level of infection 5 % of the herd during a year when proper sanitation practices

are used. That means, only five goats on 100 goats will have mastitis.Hoof trimming and dehorning costs are not included in Vet & Medicine cost as they arecompleted by the farmer, however not always. Thus, we have included 10% miscellaneous cost tothe veterinary & medicines budget to cover these costs.

More details on the vaccination program are available in the appendix section.

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Unit Dairy Goat Farm

Head 100 200 400Goats

$ $ 950 $ 1,900 $ 3,800

Head 25 50 100Replacement Kids

$ $ 125 $ 250 $ 500Others (hoof

trimming/dehorning)$ $ 108 $ 215 $ 430

Total Cost $ $ 1,183 $ 2,365 $ 4,730

Cost per Animal $/Goat $ 11.8 $ 11.8 $ 11.8

For the purposes of this paper, we assumed a constant cost per farm size. Although travel andtime per goat costs may go down its anticipated that management factors may increase costs asthe farm gets larger thus offsetting per goat savings.Our costs appear to be higher than other states however, those budgets were completed in the1990’s and corrected for inflation those budgets may be comparable to ours in 2006. Meat goatdata from University of Kentucky, Rutgers, and The Ohio State University show costs at $4.00 to$7.00 in the 1990’s. For a dairy goat operation, the University of Pennsylvania(http://pubs.cas.psu.edu/FreePubs/pdfs/ua260.pdf), in 1198, shows a $10.00/head cost.As a conclusion, the cost in this budget is higher than what the other states have taken intoconsideration. These disparities can be explained by higher standards of vaccination, care and2006 pricing.Source: http://aede.osu.edu/Programs/FarmManagement/Budgets/AS-14-0211.pdf,www.sheepandgoat.com/spreadsheets/meatgoatbudget2004.xlsagalternatives.aers.psu.edu/livestock/meatgoat/meat_goat.pdfwww.uky.edu/Ag/AgEcon/pubs/software/GoatBudgets.xls.

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4. Dairy Herd Improvement Association (DHIA)

A. General

DHIA is used to improve the farmer’s knowledge of individual and overall milk production (milkweight, protein, butterfat and somatic cells), herd age, breeding and kidding date and otherrecords. These objectives allow higher profitability margins, animal selection and finally bettermanagement. The Vermont DHIA office has provided this information.The farmer has a wide range of options with DHIA services. However we assume the followingoptions are used on the farm:

• Milk weight/butterfat/protein/SCC tests

• Sampling and recording made by a DHIA technician

• Software PCDART (reports of individual animal: production, goats to kid, to dry off, to breed…)

•

Renting milk meters

B. DHIA Monthly Cost

Herd size 100 200 400

Meters 8 16 24

Standard cost (MW) $ 188. 24 $ 288. 32 $ 486. 00

MW + SCC $ 208. 24 $ 328. 32 $ 566. 00

MW/BF/Prot $ 213. 24 $ 338. 32 $ 586. 00

MW/BF/Prot/SCC $ 228. 24 $ 368. 32 $ 646. 00

MW/BF/Prot/SCC/MUN $ 253. 24 $ 418. 32 $ 746. 00

MW: Milkweight, BF: ButterFat, Prot: Proteins, SCC: Somatic Cells Count, MUN: Milk Urea Nitrogen

As you can see there are plenty of options but for purposes of this paper we assumed that farmerschose milkweight/ butterfat/ protein/ somatic cells count as the standard package.The DHIA cost per year, as an example, for 100 goats, is $2,739($228.24 X 12 months).DHIA should be considered a long-term investment as well as a standard operating cost. It is alsouseful tool to take advantage of animal potential and to cull many undesirable animal traits.

5. Hauling Costs

Hauling is provided by Pouliot & Corriveau for Vermont Butter and Cheese Company. The totalhauling cost is shared between Vermont Butter and Cheese Company and farmers.Hauling costs are calculated by a stop charge depending on the farm location from VermontButter and Cheese Company and farm location, plus a charge per hundredweight. We alsoincluded the dues and promotion fee. For this paper, we assumed a $50 stop charge (20 milesfrom the plant) with a cost at $0.50 per hundredweight (cwt) of milk.

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The milk promotion fee is a contribution to the Vermont milk industry promotion at 10 cents percwt weight of milk. The funds are used to research and promote goat milk and goat milk products.

Herd sizeHauling Unit

100 200 400Stop Charge $ $5,200 $5,200 $5,200

Charge per Hundredweight $ $807 $1,615 $3,230

Dairy Promotion Fee $ $162 $323 $646

$ $6,169 $7,138 $9,076

$/head $61.69 $35.69 $22.69Total Hauling Cost

$/cwt $3.82 $2.21 $1.40

Please note the “economies of scale” available at higher herd sizes.

6. Hired labor

A Labor rate of $10 per hour for a hired person is used. It includes wage, Social Security andMedicare taxes, FICA, workman’s compensation and FUTA taxes where applicable. This may bedifferent in your area.The time spent to milk goats is about 6 hours per day for the herd size listed with the parlorslisted, however, your time may vary depending on number of goats milk, parlor size, proceduresused, age of goats, and other factors. It also takes one hour per milking to clean the milking parlor, milk house, and milking equipment regardless of goat herd numbers. The second largestamount of time is spent feeding animals and then the third most time is goat management.

Efficiencies in milking time can be made by increasing parlor size and automation of milking.Other efficiencies can be made with feeding by sizing the feed storage facility, utilizing mixerwagons, bucket tractors, and other mechanical means to reduce labor costs. We have seen caseswhere 400 goats can be milked in three hours per milking.The employee on a 400 goat operation typically milks the goats with the farm operator and provides many tasks such as feeding, breeding, goat management functions, and perhaps some building and machinery repair. Typically, a farm employee will work 50 – 60 hours a week withone – 1.5 days off/week. Although labor costs show $26,000/year additional costs may be“hidden” in benefits such as housing, insurance, produce and other items.

7. Supplies and Miscellaneous

This line item typically contains a variety sort of expenses such as: neck chains - to identifyanimals, paper towels, pre & post teat dipping products, nipple buckets, expendables, outdoorsupplies and other items that are used once and thrown away or have a life of less than one year.The financial data from four farms (excluding one because of the marketing costs included in thiscategory) give a range from $29 to $49 per head. Chemicals were categorized separately and thuswe used a $30/head average.

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Milkhouse chemicals were estimated at $639, $735 and $865 for the 100, 200 and 400 goats herdrespectively. These calculations show a price decrease per goat from $6.39 to $2.16.

8. Diesel, Fuels and Lube

It is assumed that each farm has a tractor to distribute feed, clean barns and other activities.We assumed different horsepower tractors between the three farm sizes, 40, 60 and 80 HP for the100, 200 and 400 goat dairies, respectively. No costs were associated with growing crops as thegoat herds in the program did not raise crops and had minimal pasture. Typically, corn silagerations utilize the tractor more than with hay and haylage rations. Costs were one hour per daywith corn silage and half hour per day with dry hay and haylage systems. Lubrication costs wereallocated at 15% of the total fuel costs.Barn cleaning was performed every two weeks depending on weather, at two hours per cleaningor 50 hours per year. Additional uses for the tractor were also calculated at 50 hours per year.Consequently, tractor use may be from 282 hours per year to 467 hours per year depending onfeeding type, size of operation, tractor size, and outside activities. Diesel price considered here is

$3.00 per gallon due to the inflation, the 2005 price were $2.28 per gallon.The cost calculations have been made by using American Agricultural Economics Association ‘smethod enclosed in the Commodity Costs and Returns Estimation Handbook(http://www.economics.nrcs.usda.gov/care/Aaea/ p.5-32 - 5-34)

100 200 400

Ration Corn Silage (1) $ 2,823 $ 4,234 $ 5,645

Ration Hay and Haylage (2 and3) $ 1,717 $ 2,575 $ 3,433

9. Utilities

For this category, the cost ranged from $20 to $50 per goat and related to size. This category alsoincludes the cost for electricity and business phone.

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10. Repairs and Maintenance

In this cost category, livestock buildings and equipment are included to estimate the yearly cost.Given the data of the five farms surveyed, a range per goat is from $156 to $6,660. Thus with thiswide variation it shows the difficulty to estimate the yearly cost. However, Doane (Farm

Management Guide, 1985) estimates repair and maintenance of buildings at 2-3% of original purchaseor construction cost. Thus, we assumed an estimate for the cost of repairs and maintenance based onthe value of the buildings and equipment rather than utilize the data provided by the sample farms.

Value 100 200 400

Buildings $85 520 $118 000 $199 040

Milk Equipment $12 910 $22 600 $34 340

Equipment $12 000 $12 000 $50 000

Repairs and Maintenance $3 313 $4 578 $8 501

11. Taxes

Real estate taxes vary from state to state and between towns. There are also Current Use TaxationPrograms that allows the taxation of real estate based on its current agricultural or forestry userather than its developmental possibilities. The following table has estimated taxes expense inthis study:

Value 100 200 400

Surface (acre) 15 20 30

House (acre) 2 2 2

Farm (acre) 13 18 28

Acres Value ($) $ 65,000 $ 90,000 $ 140,000

Buildings Value ($) $ 85,520 $ 118,000 $ 199,040

Taxes ($) $ 4,515 $ 6,240 $ 10,171

Taxes are obtained by the following calculation:Taxes expense = (Acres Value + Buildings Value) * 3%The three percent value is the Vermont average tax factor in 2005. That means for each $100

building or acre value, $3 will correspond to the tax.Equipment is not subjected to the real estate taxes.

12. Interest and Principal

The farm business expense interest corresponds to the farm mortgages or/and other obligations(loans) that you incur in your farm business.In Vermont, the interest rate is about 7% of the total loan value. We caution the reader tounderstand that the different assets are financed over a different period of time. Most of the time,loans on land and buildings assets are paid off over 20 years while equipment loans are on 7

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years payback periods and livestock are financed over 5 years. Livestock can be financed over 3or 7 years depending on the replacement rate. However, it is advisable to pay off the livestockmortgage at the same rate as animals are culled from the herd. Thus, a culling rate of 30% meansthat animals should be financed over 3 years whereas a cull rate of 20% means financing over 5years. Generally, the greater the number of animals, the higher the debt, as financing becomes

more a part of the overall business strategy. The smaller operations tend to have loans against thereal estate but not against the goat herd itself. (Or at least not to the same level per goat as at thelarger goat herds). Thus for the purposes of this paper we assumed that the 200 and 400 goat sizeherds are financed at the 50% level by the bank whereas the ownership of the small 100 goatoperation is 100% by the owner and the land and equipment is financed at the 50% level.

100 200 400

Personally Owned Value Personally Owned Value Personally Owned Value

Land + Buildings 50% $150,500 50% $208,000 50% $364,000

Equipments 50% $24,910 50% $34,600 50% $84,300

Livestock 100% $19,500 50% $39,000 50% $78,000

Total Value $194,910 $281,600 $526,000 In this case, the interest rate chosen is 7%.

100 200 400 Assets Years

Interest per Year Interest per Year Interest per Year

Land + Buildings 20 $5,210 $7,202 $12,603

Equipments 7 $827 $1,148 $2,797

Livestock 5 $1,258 $2,516

Total $6,037 $9,608 $17,916

Principal

100 200 400 Assets Years

Principal per Year Principal per Year Principal per Year

Land + Buildings 20 $1,790 $2,474 $4,330

Equipments 7 $1,429 $1,985 $4,837

Livestock 5 $3,375 $6,751

Total $3,219 $7,835 $15,917

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VI Cash Flow Sheets

The following sheets show sample cash flows for the three example herd sizes taking intoconsideration the explanations provided above and factors provided throughout the paper. All

aspects of the cash flow sheets are critical but it is especially important to see the variation shown between the feeding regimens outlined on page 22 and utilized in the cash flow sheets listed on page 32.

We have found that its also useful to look at the goat operation on a per goat and perhundredweight (cwt) basis as no operation has exactly 100, 200, or 400 goats and no operationhas goats producing exactly 1,700 lbs per goat. Thus by doing it on a per goat and per cwt. basiswe allow the reader to look at comparisons that may more closely compare their operation to thescenario in this paper.

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32

Item Farm 1 Farm 2 Farm 3

Number of goats 100 200 400

Pounds of Milk Sold 156400 312800 625600

Milk Price $35.08 $35.08 $35.08

CASH RECEIPTS

Milk Sales $ 54,867 $ 109,733 $ 219,466

Bonuses $ 6,262 $ 12,523 $ 25,046

Goat Sales $ 1,600 $ 3,200 $ 6,400Kids, bucks, and other Livestock $ 1,328 $ 2,540 $ 4,980

Total Cash Receipts $ 64,056 $ 127,996 $ 255,893

CASH EXPENSES

Bedding $ 2,500 $ 4,500 $ 8,100

Chemicals $ 639 $ 735 $ 863

DHIA $ 2,739 $ 4,420 $ 7,752

Ration 1 (Corn Silage) $ 17,496 $ 34,991 $ 69,982

Ration 2 (Haylage) $ 20,620 $ 41,240 $ 82,481

Ration 3 (Hay) $ 22,211 $ 44,422 $ 88,845

Feeding Kids and replacement $ 2,434 $ 4,869 $ 9,737Freight and trucking $ 6,008 $ 6,816 $ 8,328

Gasoline, fuel and oil -

Ration 1 $ 2,823 $ 4,234 $ 5,645

Ration 2 – 3 $ 1,717 $ 2,575 $ 3,433

Insurance (other than health) $ 2,533 $ 3,286 $ 7,000

Interest $ 6,037 $ 9,608 $ 17,916

Labor hired, pension and profit sharing $ 26,000

Repairs and maintenance $ 3,313 $ 4,578 $ 8,311

Taxes $ 4,516 $ 6,240 $ 10,171

Utilities $ 3,000 $ 6,000 $ 12,000

Veterinary fees and medicine $ 1,300 $ 2,600 $ 5,200Animal Purchased $ 1,000 $ 1,750 $ 3,250

Supplies & Miscellaneous $ 3,000 $ 6,000 $ 12,000

Total Cash Expenses

Ration 1 $ 59,337 $ 100,627 $ 212,257

Ration 2 $ 61,355 $ 105,217 $ 222,543

Ration 3 $ 62,946 $ 108,399 $ 228,907

Net Cash Flow

Ration 1 $ 4,720 $ 27,370 $ 43,636

Ration 2 $ 2,701 $ 22,779 $ 33,349 Ration 3 $ 1,110 $ 19,597 $ 26,985

Principal $ 3,219 $ 7,835 $ 15,917

Net For Family Fiving Ration 1 $ 1,500 $ 19,535 $ 27,718

Net For Family Fiving Ration 2 $ (518) $ 14,945 $ 17,432

Net For Family Fiving Ration 3 $ (2,109) $ 11,763 $ 11,068


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33

Per Goat Basis Farm 1 Farm 2 Farm 3


Pounds of Milk Sold 1564 1564 1564

Milk Price $ 35.08 $ 35.08 $ 35.08

CASH RECEIPTS

Milk Sales $ 549 $ 549 $ 549

Bonuses $ 63 $ 63 $ 63

Goat Sales $ 16 $ 16 $ 16

Kids, bucks, and other Livestock $ 13 $ 13 $ 12

Total Cash Receipts $ 641 $ 640 $ 640

CASH EXPENSES

Bedding $ 25 $ 23 $ 20

Chemicals $ 6 $ 4 $ 2

DHIA $ 27 $ 22 $ 19

Ration 1 (Corn Silage) $ 175 $ 175 $ 175

Ration 2 (Haylage) $ 206 $ 206 $ 206

Ration 3 (Hay) $ 222 $ 222 $ 222

Feeding Kids and replacement $ 24 $ 24 $ 24Freight and trucking $ 60 $ 34 $ 21

Gasoline, fuel and oil

Ration 1 $ 28 $ 21 $ 14

Ration 2 – 3 $ 17 $ 13 $ 9

Insurance (other than health) $ 25 $ 16 $ 18

Interest $ 60 $ 48 $ 45

Labor hired, pension and profit sharing $ 65

Repairs and maintenance $ 33 $ 23 $ 21

Taxes $ 45 $ 31 $ 25

Utilities $ 30 $ 30 $ 30

Veterinary fees and medicine $ 13 $ 13 $ 13

Animal Purchased $ 10 $ 9 $ 8

Supplies & Miscellaneous $ 30 $ 30 $ 30

Total Cash Expenses

Ration 1 $ 593 $ 503 $ 531

Ration 2 $ 614 $ 526 $ 556

Ration 3 $ 629 $ 542 $ 572

Net Cash Flow

Ration 1 $ 47 $ 137 $ 109

Ration 2 $ 27 $ 114 $ 83

Ration 3 $ 11 $ 98 $ 67

Principal $ 32 $ 39 $ 40

Net for family living ration 1 $ 15 $ 98 $ 69

Net for family living ration 2 $ (5) $ 75 $ 44

Net for family living ration 3 $ (21) $ 59 $ 28


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34

Per CWT Basis Farm 1 Farm 2 Farm 4


Pounds of Milk Sold

Milk Price $ 35.08 $ 35.08 $ 35.08

CASH RECEIPTS

Milk Sales $ 35.08 $ 35.08 $ 35.08

Bonuses $ 4.00 $ 4.00 $ 4.00

Goat Sales $ 1.02 $ 1.02 $ 1.02

Kids, bucks, and other Livestock $ 0.85 $ 0.81 $ 0.80

Total Cash Receipts $ 40.96 $ 40.92 $ 40.90

CASH EXPENSES

Bedding $ 1.60 $ 1.44 $ 1.29

Chemicals $ 0.41 $ 0.23 $ 0.14

DHIA $ 1.75 $ 1.41 $ 1.24

Ration 1 (Corn Silage) $ 11.19 $ 11.19 $ 11.19

Ration 2 (Haylage) $ 13.18 $ 13.18 $ 13.18

Ration 3 (Hay) $ 14.20 $ 14.20 $ 14.20

Feeding Kids and replacement $ 1.56 $ 1.56 $ 1.56

Freight and trucking $ 3.84 $ 2.18 $ 1.33

Gasoline, fuel and oil $ 0.00 $ 0.00 $ 0.00

Ration 1 $ 1.80 $ 1.35 $ 0.90

Ration 2 – 3 $ 1.10 $ 0.82 $ 0.55

Insurance (other than health) $ 1.62 $ 1.05 $ 1.12

Interest $ 3.86 $ 3.07 $ 2.86

Labor hired, pension and profit sharing $ 0.00 $ 0.00 $ 4.16

Repairs and maintenance $ 2.12 $ 1.46 $ 1.33

Taxes $ 2.89 $ 1.99 $ 1.63

Utilities $ 1.92 $ 1.92 $ 1.92

Veterinary fees and medicine $ 0.83 $ 0.83 $ 0.83

Animal Purchased $ 0.64 $ 0.56 $ 0.52

Supplies & Miscellaneous $ 1.92 $ 1.92 $ 1.92

Total Cash Expenses

Ration 1 $ 37.94 $ 32.17 $ 33.93

Ration 2 $ 39.23 $ 33.64 $ 35.57

Ration 3 $ 40.25 $ 34.65 $ 36.59

Net Cash Flow

Ration 1 $ 3.02 $ 8.75 $ 6.97

Ration 2 $ 1.73 $ 7.28 $ 5.33 Ration 3 $ 0.71 $ 6.27 $ 4.31

Principal $ 2.06 $ 2.50 $ 2.54

Net for family living ration 1 $ 0.96 $ 6.69 $ 4.92

Net for family living ration 2 ( 0.33 ) $ 5.22 $ 3.27

Net for family living ration 3 ( 1.35 ) $ 4.21 $ 2.26


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VII Discussion

People interested in milking goats for sale to Vermont Butter and Cheese Company or doingsomething else, need to understand the crucial aspect of building a business plan and have a

financial approach before proceeding with the operation.This document has been written as a guideline highlighting some areas that someone interested ingoat has to think about. Our choice of building different operation sizes is to illustrate anddemonstrate the possibilities of “economies of scale”. This does not mean that this will in factinclude all the income and costs associated with each size nor are the authors pretentious enoughto say that one size is better than another nor is goat farming always profitable or not. Moreover,this document does not say what is going to happen in your particular case. Every case isdifferent and a business plan is needed to provide guidance, find Strengths, Weaknesses,Opportunities, Threats, (SWOT) to your business and to provide you with a road map to success.The assumptions made in this study are numerous and theoretically bring some errors. However,the assumptions have been made from published studies from France and U.S. as well as

collected data from the sample farms. Unfortunately, there was a lack of statistically significantdata from the field that explains the use of studies to expand on the data from the field. Theabsence of records on Vermont dairy goat farms is important to realize and thus in many cases wedid not have actual data to back up the published data from France and U.S.There are unique financial data taken into consideration with this survey on Vermont Goat farmswhich are different or similar to other studies. For instance, goats in France are fed Alfalfa pellets, which is not done here, and Current Use Taxation is unique to Vermont. In addition, thereare many other areas that are different. However, there are some areas of similarities includingthat: goats are productive (92%), 10% loss on kids, a 1.7 kidding rate per goat and a 1,700 lbsmilk production per goat (which is reachable).The milk fluid income is based on the milk price from Vermont Butter and Cheese Company and

shows that milk income represents 95% of the total farm income. By comparison, to the fivefarms, the milk receipts in this study are higher. It does not inevitably mean that the milk incomeis higher, it can be the animal sale income that would be underestimated or other sources ofincome are not utilized, for example: government payments for conservation practices.All the commercial dairy farms presented here, have the same level of production with anaverage payprice of $ 35.08 per hundredweight (cwt) and the same amount of total income percwt at $ 40.79.Consequently, the biggest differences appear to be on the expense side and this study shows someeconomies of scale in the following costs: bedding, fuel, freight and trucking and chemicals. Notall dairy goat farm sizes have positive cash flows. In fact, the 100 dairy goat operation showsnegative cash flow with two regimens while this with corn silage give a positive one’s. A 100

goat operation, in this study, shows a loss from $ 518 to $ 2,109 and at the same a profitability of$1,500 which is not sufficient to provide family living.The two other farm sizes appear more viable. Farmers may have enough net cash flow to paytheir own wages either with 200 or 400 goats. At the maximum in the 200 goat case, the amountavailable for reinvestment, principal payments and owners draw (or salary) is $ 19,535 and for400 goats, it is $ 27,718.

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In comparing these theoretical farms by goat or per hundredweight basis, the 200 goat operationseems the most profitable one with $ 4.21 to $ 6.69 per hundredweight income translating $59 to $ 98 income per goat basis.

Generally, the 200 and 400 goat operations are more profitable than the 100 dairy goat operation.

Incomes can be increased by many different ways:

1. Improving the milk quality and quantity production levels2. Raising breeding stocks3. Selling semen surplus animals to others4. Other sources of incomes (governmental payment, dividends…)5. Synergistic effects can be had by combining 1-4 above6. Diversification of the operation to fully utilize resources

Expenses can be decreased in many different ways as well:Expenses can be improved by utilizing advantages surrounding your farm such as near a feedcompany, ease to find good quality and price for feed (hay, haylage…), possibilities to produceyour own feed which cost less than to buy it, be close to Vermont Butter and Cheese Company(freight and trucking), and other expenses related to the assets. Expenses can also vary accordingto feed availability, quality forage land base, and management styles.Here, assets include buildings, milking equipments, livestock and one tractor of varying size witha bucket loader. The assets may be more or less different depending on what you own.

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VIII Conclusion

This study shows the farm possibilities to produce and ship milk to Vermont Butter and CheeseCompany in Websterville, Vermont. As this study shows a 100 goat operation is not profitableenough to provide a farm living income while bigger operations seem adequate to provide it.However, a small herd can be an interesting hobby to have another income and perhaps grow intoa full time dairy goat operation.

Nevertheless, a goat business, however as small as it is, must be assessed thanks to a business plan and a financial approach taking into consideration technical numbers, management styles,goals, and long-term vision of the owners.

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References Books:

BOSWORTH. S, 2006. Corn Silage Forage Quality in Vermont for 2005.http://pss.uvm.edu/vtcrops/articles/ForTestLab/HaylageSum1105.pdf

BOSWORTH. S, 2006. Haycrop Silage Quality in Vermont 2005.http://pss.uvm.edu/vtcrops/articles/ForTestLab/CornSilageQuality05.pdf , 2005 Corn Silage

COFFEY L., HALE M., WILLIAMS P., 2004. Dairy goats: Sustainable production. ATTRA- National Sustainable Agriculture Information Service. p32. http://www.attra.org/attra- pub/PDF/dairygoats.pdf

COFFEY L., HALE M., WILLIAMS P., 2004. Dairy goats: Sustainable production overview.ATTRA-National Sustainable Agriculture Information Service. p24. http://www.attra.org/attra- pub/PDF/goatoverview.pdf

COFFEY L., REYNOLDS J., HALE M., 2004. Small ruminant sustainability checksheet. ATTRA-National Sustainable Agriculture Information Service. p44. http://www.attra.org/attra- pub/PDF/ruminantcheck.pdf

CORCY J-C., 1991. La Chèvre. Paris : La maison rustique, 255 p.

DAWSON. L, 2006, Basic Goat Husbandry, 6 p.http://www2.luresext.edu/goats/library/field/dawson06.pdf

DOANE. 1985. Farm Management Guide. “Farm Building Economics.”St. Louis, MO:

EIDMAN. V , HALLAM. A , MOREHART. M , KLONSKY. K , 2000. Commodity Costs and Returns Estimation Handbook. http://www.economics.nrcs.usda.gov/care/Aaea/

FARM FINANCIAL STANDARDS COUNCIL. 1997. Financial Guidelines for AgriculturalProducers. 90p.

GIRAUD D., KLONSKY K M., LIVINGSTON P., 2005. Sample costs for a 500 dairy goatoperation. University of California Cooperative Extension. p14.http://coststudies.ucdavis.edu/uploads/new_cost_returns/dairygoatsnc05.pdf

GUINAMARD. C, CARAMELLE-HOLTZ. E, BOSSIS. N, ANICAP, 2005. Pour uneinstallation réussie en élevage caprin. Institut de l’élevage. P 124. ISBN n° 2-84148-132-8

INSTITUT DE L’ELEVAGE, February 2001. S’installer en élevage caprin. Repères pour uneréussite. Institut de l’Elevage. P62.

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Appendix Tables and Explanations


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Table of Contents

I Milk Income ______________________________________________________________1

1. Milk Production Calculation ______________________________________________1

2. Over Quota Protein Level Calculation ______________________________________2

3. Milk Payment___________________________________________________________3

4. Bonus Payment _________________________________________________________3

II Milk Income Summary______________________________________________________4

1. 100 Dairy Goat Operation ________________________________________________4

2. 200 Dairy Goat Operation ________________________________________________5

3. 400 Dairy Goat Operation ________________________________________________6 III Milk Composition ________________________________________________________7

1. Test Results on Protein Level (%) __________________________________________7

2. Test Results on Butterfat Level (%) ________________________________________8

IV Milk MailBox Price ______________________________________________________9

V DHIA Cost ______________________________________________________________10

VI Animals Sales __________________________________________________________10

VII Chemical Cost__________________________________________________________11

VIII Vaccination Program ____________________________________________________12

IX Kids and Yearling Feed Program __________________________________________13

1. 100 Dairy Goat Farm Operation __________________________________________13 A. Feed Quantity Used per Year ____________________________________________13 B. Yearly Cost for Raising Kids and Yearling _________________________________13

2. 200 Dairy Goat Farm Operation __________________________________________13 A. Feed Quantity Used per Year ____________________________________________13 B. Yearly Cost for Raising Kids and Yearlings_________________________________14

3. 400 Dairy Goat FarmOoperation__________________________________________14

A. Feed Quantity Used per Year ____________________________________________14 B. Yearly Cost for Raising Kids and Yearlings_________________________________14

X Fuel, Diesel and Lube _____________________________________________________15

XI Buildings Budget _______________________________________________________16

1. Goats Requirements ____________________________________________________16

2. Buildings Size and Budget _______________________________________________18

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I Milk Income

1. Milk Production Calculation

It is assumed that the 92% of the goats produce in average of 1,700 lbs milk per year. With thisstarting assumption, we calculated the yearly milk production expected (Total). For example: a100 goat operation normally has 92 goats in production at any one time. For a total yearly production of 170,000 lbs. However, one cannot say that the production will be 14167 lbs permonth to get monthly production (170,000/12). In fact the monthly production will varytremendously due to the seasonality effect of breeding and kidding. To make this clearer, we haveoutlined an example of the goat milk produced on a “real dairy goat farm”. The numbers belowrepresent one producer who shipped milk year round from the study. You will note a largevariation from an average monthly amount produced throughout the year.

The total milk production for the year was 107,028, however 9,102 lbs. were shipped in Januaryas opposed the calculated amount of 8,919 lbs (107,028/12). This variance becomes even moreevident during the months of February, March, and December as outlined below.

MonthMilk Production

(lbs)% of

productionJan 9102 8.50%

Feb 5160 4.82%

Mar 6203 5.80%

Apr 8811 8.23%

May 11209 10.47%

June 10913 10.20%

July 10100 9.44% Aug 9625 8.99%

Sept 10367 9.69%

Oct 9721 9.08%

Nov 10402 9.72%

Dec 5415 5.06%

Total 107028 100%

We also used averages for protein and butterfat levels based on production levels from each farmin the study. Vermont Butter and Cheese Company pays the dairy goat farms by protein but doesvary payments based on milk quality. We did use their payment schedule and Vermont Butter

and Cheese Company does test the milk for protein, butterfat, somatic cell counts (SCC),laboratory pasteurized count and PI counts from each shipment.

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2. Over Quota Protein Level Calculation

As it is mentioned in the VBCC Agreement, “the Quota Milk is considered as the total of all milk pickups made between 1. October 1

st through January 31

st or 2. November 1

st through February

28th or 3. November 1st through March 31st whichever is the highest number. Milk purchased

during this period is rated at $11.50 per pound of protein up to the limit set by the Quota Period,and $9.00 per pound of protein beyond the Quota limit.” Consequently it would be advantageousto the producer to increase the production of milk during those prices setting months and tomatch production to nearly meet quota during non-price setting months.

Note: the price setting months have a different number of weeks in the period 17 – 15 - 22 weeksthus use the appropriate when calculating the quota lbs per month.

MonthTotal Protein

Shipped(lbs)

QuotaProtein

(lbs)

Jan 380.2Feb 295.9 430.9

Mar 385.9 430.9

Apr 460.7 430.9

May 534.4 430.9

Jun 548.8 430.9

Jul 474.6 430.9

Aug 495.8 430.9

Sept 414.8 430.9

Oct 484.7

Nov 551.1

Dec 307.7

In the above scenario, we assumed that the previous year (2005) milk production was exactlysame as the year 2006. Although that never happens it does provide a good example.Consequently, this farm shipped from October 1st 2005 to January 31st 2006, 1,723.70 lbs of protein for the 4 continuous months for a monthly quota of 430.93 lbs of protein.(484.7+551.1+307.7+380.2 = 1,723.7/4= 430.9This number is higher than the monthly quota founded from 1st November through 31st Marchwhich is 386.16 lbs of protein (551.1+307.7+380.2+295.9+385.9) =1930.80/5 = 386.2) and thecalculated number for November through February which is (551.1+307.7+380.2+295.9)=1930.80/4 = 482.7)

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3. Milk Payment

After this calculation, the quotas applied from 1st February to 31st September (or 1 April – 31 Oct.

whichever is higher). The protein produced until the 432.9 lbs/month is reached would be paid at$11.50 per lbs of protein and beyond this limit of 432.9 lbs of protein /month is paid $9.00/lb of protein.Example:

Milkproduction

(lbs)% Protein % Butterfat

Total Proteinshipped

Quota protein(lbs)

Incomes BonusesPrice per

Cwt

Jan 8.05 12,587 3.58 4.29 450.2 $ 5,177.7 $ 659.4 $ 46.37

Feb 5.60 8,763 3.39 4.18 297.4 432.9 $ 3,419.7 $ 302.3 $ 42.47

Mar 6.26 9,792 3.74 3.83 366.5 432.9 $ 4,214.4 $ 337.8 $ 46.49

Apr 8.10 12,664 3.46 3.53 438.5 432.9 $ 4,928.0 $ 436.9 $ 42.36

For the month of January, 450.2 lbs of protein have been shipped, given the milk production is inthe quota period, the milk income is $11.5 X 450.2 = $5,177.70.For the month of April, non-quota period, 438.5 lbs of protein have been produced, with an overquota level of 5.6 lbs, we come up with (432.9 lbs X $11.5/lb) + (5.6 lbs X $9.00) = $ 4,928.

4. Bonus Payment

The bonus rate is $3.45 per cwt of milk; therefore for 100 goats which produce 156,400, the farmearns a total of $6,162.6. Moreover, a winter premium is paid for the quota period (October 1 st

through January 31st) at $0.50 per pound of protein.

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commercial dairy goat farms

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