On-Farm Processing & Co-Packing Category Guide

Adding Value Through Processing

Some dairy farms process milk on-site into cheese, yogurt, ice cream, butter, or bottled milk. On-farm processing can capture retail margins and build direct customer relationships, but requires significant investment in equipment, facilities, and skills.

Types of On-Farm Processing

Fluid Milk

• Pasteurization (batch or HTST)
• Bottling and packaging
• Cream separation
• Homogenization (optional)

Cheese Making

• Vats and cheese presses
• Aging facilities
• Specialized equipment by cheese type
• Packaging and labeling

Cultured Products

• Yogurt incubation and packaging
• Kefir production
• Sour cream and cottage cheese

Frozen Desserts

• Ice cream mix processing
• Batch freezers
• Hardening and storage
• Packaging equipment

Facility Requirements

Construction

• Separate processing area from farm operations
• Food-grade surfaces and finishes
• Proper drainage and ventilation
• Temperature-controlled storage

Utilities

• Potable water supply
• Adequate electrical service
• Steam or hot water generation
• Wastewater handling

Regulatory Considerations

• State dairy plant licensing
• HACCP plans and food safety programs
• Labeling requirements
• Regular inspections
• FDA registration for interstate sales

Getting Started

• Start small and learn the craft
• Attend processing workshops and courses
• Work with experienced processors or mentors
• Develop markets before building capacity
• Understand full costs including labor

Cost Considerations

Small-scale processing facilities can be started for $50,000-150,000 for basic fluid milk or cheese. Commercial-scale operations require $500,000-2,000,000+. Equipment costs vary widely—a small batch pasteurizer might be $10,000-30,000 while a complete cheese plant costs $200,000+. Plan for ongoing costs: packaging, labor, compliance, and marketing.