How to Start & Manage a Micro Dairy, Part 7: Budgeting and Finance

Reader Contribution by Steve Judge
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Humor me while I share one of my favorite farmer jokes: A banker, a realtor and a farmer are on a plane. They get to talking about winning the lottery.&nbsp; The banker says that if he won, he would split the winnings between the stock market and a trust fund for his kids.&nbsp; The realtor would buy and sell homes for a quick profit.&nbsp; The farmer chimes in: “I guess I’d just keep farming until it was all gone.”&nbsp;</p>
<p>This joke makes me chuckle because the farmer clearly understands his dilemma.&nbsp; The traditional model of farming full-time is one of the most difficult ways to make a living.&nbsp; You are beholden to the weather, <a href=”https://www.motherearthnews.com/homesteading-and-livestock/how-to-start-and-manage-a-micro-dairy-in-26-steps-step-3″ target=”_self”>animals</a>, the marketplace, and consumer whims. And, it can be grueling work. However, micro dairies represent a new economic model for dairy farming that allows you to minimize your investment in time, labor and resources. To be successful, micro dairies require a sober commitment to limit your production to the demands of your available market.&nbsp; Most important, you must set clear financial goals and stick to a limited budget.&nbsp; Here are my best tips for making a micro dairy financially viable:&nbsp;</p>
<p>First things first, understand that for most people who farm on a <a href=”https://www.motherearthnews.com/homesteading-and-livestock/how-to-start–manage-a-micro-dairy-in-26-steps–step-2″ target=”_self”>smaller scale</a>, farming is often more about quality of life than it is about income. The goal is to have your micro dairy pay for itself and contribute a few extra dollars to your diversified income stream. Create a financial plan that incorporates the farm as one portion of your varied income base. Calculate financial projections for your farm, including your potential income and operating expenses (such as the cost of feed, vet bills supplies and utilities), then double these expense projections and cut your income projections in half.&nbsp; This should bring your plan closer to reality, especially if you lack actual farming experience.

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