Wert-Berater, Inc. is an independent dairy farm feasibility study consultant preparing lender- and agency-ready analyses for dairy acquisitions, expansions, new facilities, herd growth, and associated infrastructure. Our studies evaluate milk production per cow, milk pricing and components, margin over feed, herd ramp, feed sourcing, parlor capacity, labor, manure-management costs, facility investment, working capital, debt-service coverage, and downside sensitivity. 4,000+ engagements since 1998 covering $41.2 billion in evaluated project value.
Dairy feasibility reduces to one governing measure: margin over feed. Milk revenue and feed cost are the two largest and most volatile lines in the operation, they move independently of one another, and the spread between them is what services debt. A dairy can be producing well and still fail if the milk-to-feed relationship turns against it for long enough. The study establishes that margin on the operation’s own production and ration data, then tests how far it can compress before coverage fails.
Methodology uses Federal Milk Marketing Order class and component prices for the order in which the farm ships, USDA NASS milk production and cow-number series, USDA ERS dairy cost-of-production accounts, university Cooperative Extension dairy enterprise budgets for the state, and the operation’s own DHIA or herd-management records, milk cheques, and ration sheets. Where the farm has an established production record it governs the projection; where the proposal is a new facility, production is built from documented performance of comparable facilities and held conservative until the herd is established.
Every Wert-Berater financial model is fully linked with no hardcoded values, so any reviewer can stress any input. Deliverables comprise a complete narrative report and the linked Excel model, with ten-year pro forma, sensitivity analysis at ±5, 10, and 15 percent, interest-rate stress from +0.5 to +3.0 percent, and ratio analysis benchmarked against USDA ERS dairy financial data and regional extension budgets.
Dairy credit is written to the standard of the institution underwriting it. Farm Credit System institutions and Farm Service Agency farm loan programmes are the principal sources of term and operating credit for milk production, and both weigh documented production per cow, ration cost control, and working-capital adequacy alongside projected coverage. Conventional agricultural lenders set their own coverage standard, commonly but not universally 1.20x. Where a dairy proposes to process its own milk, package fluid or cultured product, or market a branded dairy line, different programmes come into play than those governing the milking operation itself. We do not assume a programme applies; eligibility is determined by the lender and the agency on the applicant’s facts, and the study is prepared to whichever standard is actually in play.
Wert-Berater has completed 4,000+ engagements since 1998 covering $41.2 billion in evaluated project value, with a substantial USDA rural practice. We hold no published completed engagement for a milking dairy, and we will not present an unrelated engagement as though it were one. Our published agricultural engagements are in horticultural production, agricultural processing, and agricultural input manufacturing — including a $17,350,000 controlled-environment greenhouse study in Radium Springs, New Mexico completed under USDA Business & Industry, a $38,110,000 sugar refinery restoration in Santa Rosa, Texas, and a $32,240,000 fertilizer manufacturing study in Jacksonville, Florida. Those engagements demonstrate USDA documentation practice and agricultural commodity analysis rather than dairy production experience. Independence is non-negotiable: determinations follow the evidence and are not revised under pressure.
A dairy feasibility study determines whether a specific herd, in a specific facility, shipping into a specific milk market, can service proposed debt across the milk-price and feed-cost cycle. Unlike most agricultural enterprises a dairy produces revenue every day of the year, which makes it cash-flow rich and margin-thin: small movements in milk price or ration cost produce large movements in the residual that services debt.
Revenue per cow is built from the herd’s own performance rather than from a regional average. The starting point is documented production — DHIA records, herd-management software output, or the milk cheques themselves, which are independently generated and therefore the most reliable evidence available. Those records establish pounds per cow per day, the lactation curve the herd actually achieves, and the consistency of that performance across seasons.
Components matter as much as volume. Under Federal Milk Marketing Order pricing, payment is driven substantially by butterfat and protein rather than by fluid pounds alone, so two herds shipping identical volume can receive materially different cheques. The analysis uses the herd’s actual component tests, and where a proposed ration or genetic programme is expected to shift components, that shift is treated as a projection requiring evidence rather than as an assumption.
Somatic cell count and milk quality enter through the premium and penalty schedule in the processor agreement. Quality premiums are real revenue and quality penalties are real cost, and both are modeled at the herd’s demonstrated cell count rather than at an aspirational target. For a new facility with no production record, projections are built from documented performance of comparable operations, held below the comparable mean through the establishment period, and phased to a stabilized level only as the herd settles.
Margin over feed is the analytical core of a dairy study and the measure lenders in this sector watch most closely. It is milk revenue less the cost of the feed consumed to produce it, expressed per hundredweight or per cow, and it isolates the two variables that dominate dairy profitability from the fixed costs that do not move month to month.
The margin is calculated from the operation’s actual ration — the specific forages and concentrates fed, at their actual inclusion rates, priced at what the farm actually pays or what it costs to grow. It is not taken from a published index, because a national margin series reflects a national average ration and a national average milk price, neither of which describes a particular farm shipping into a particular order with a particular feed base.
What matters for credit is not the current margin but its range. Milk price and feed cost are imperfectly correlated and can compress simultaneously: a period of high grain prices coinciding with weak milk prices produces the compression that ends dairies. The study establishes the historic range of margin over feed for the operation’s own ration and market, tests coverage at the low end of that range rather than at the mean, and states the margin at which debt service fails.
Where a dairy grows its own forage, that acreage is modeled as a production enterprise in its own right with its own yield risk, cost structure, and weather exposure, not as a source of free feed. A farm that grows most of its forage carries less exposure to purchased-feed price but more exposure to local weather; a short corn silage year forces purchases at exactly the moment regional supply is tight and prices are high.
Purchased concentrate is priced at delivered cost on current quotes, with the seasonal pattern of purchasing reflected. Where the operation forward-contracts feed or participates in a margin-protection programme, that coverage is modeled for the period it actually covers rather than assumed to persist. The analysis also examines whether the forage land base is adequate for the herd size proposed — an expansion that adds cows without adding forage acres converts a partly self-supplied operation into a feed buyer, and the pro forma must show that change in cost structure.
A dairy cannot expand faster than biology permits, and expansion projections that ignore this consistently overstate early-year cash flow. Growing the milking herd from within requires retaining heifer calves, raising them for roughly two years before first calving, and absorbing that rearing cost with no offsetting milk revenue. Purchasing springing heifers accelerates the ramp but requires cash at the point of purchase and introduces biosecurity risk.
The model reflects whichever path is proposed, month by month through the ramp. It carries the heifer inventory required to sustain the mature herd at the operation’s actual cull rate, prices the rearing cost of every animal raised, and credits cull cow and bull calf sales in the periods they occur. Where expansion is funded by retaining heifers that would otherwise be sold, the foregone revenue is shown rather than netted away.
Physical capacity sets a hard ceiling on the herd, and it is assessed against the specific facility rather than against a nominal cow count. Parlor throughput is a function of stall count, milking routine, turns per hour, and the number of milkings per day, and it determines how many cows can be milked within the hours the labor force actually works. A parlor operating three shifts to reach the projected herd size carries a labor cost and a management burden the pro forma must recognize.
Freestall and housing capacity is assessed on stall count and pen configuration, and overcrowding is treated as the production and health cost it is rather than as free capacity. Special-needs housing — maternity, hospital, and fresh-cow pens — is examined for adequacy at the proposed herd size, because insufficient transition space shows up later as production loss and elevated cull rates. Where the proposal adds cows within an existing facility, the study establishes whether the parlor, housing, feed alley, and manure system can actually carry them before the model credits the additional milk.
Dairy labor is continuous, skilled, and increasingly difficult to secure, and it is modeled at the wage the operation must actually pay in its own labor market rather than at a benchmark. The analysis establishes the full-time-equivalent requirement implied by the milking schedule, herd size, and facility layout, and prices it including payroll taxes, housing where provided, and the realistic cost of turnover.
Availability is a feasibility question in its own right in many dairy regions. An expansion that depends on hiring several additional experienced milkers in a tight rural labor market carries an execution risk that a wage assumption alone does not capture, and the study identifies it plainly. Owner and family labor is costed rather than treated as free, because a projection that omits an operator withdrawal does not show the cash the household requires.
Manure handling is a cost centre and a compliance obligation, and at scale it can be a binding constraint on expansion. The analysis establishes the volume generated at the proposed herd size, the storage capacity required for the region’s application window, the land base available for agronomic application at permitted rates, and the hauling cost where the land base is insufficient or distant.
Permit obligations are identified as they apply to the operation’s size and jurisdiction, including any nutrient-management planning, storage, and reporting requirements. Where a herd expansion would move the operation into a different regulatory category, the associated capital and ongoing compliance cost is shown in the pro forma rather than deferred. We identify these obligations as cost and risk items; we do not provide environmental engineering design or permitting opinions.
Where an anaerobic digester or renewable natural gas component is proposed, it is modeled as a separate enterprise with its own capital cost, its own revenue streams, and its own offtake and environmental-credit assumptions, and it is never allowed to subsidise the milking operation inside a single blended projection. See our RNG and biogas digester feasibility study practice, where those project economics are addressed directly.
The financial conclusion is a coverage determination under stress. The model produces a ten-year pro forma with sensitivity at ±5, 10, and 15 percent applied to milk price, production per cow, and feed cost independently and in combination, plus interest-rate stress from +0.5 to +3.0 percent in half-point increments.
The decisive test is a compressed margin over feed sustained across consecutive periods rather than a single bad month. Dairies rarely fail on one weak quarter; they fail when a compressed margin persists long enough to exhaust working capital. The model therefore tests a multi-period compression and reports the working capital remaining at its trough, alongside the milk price and ration cost combination at which coverage falls below the applicable minimum. An explicit statement of conditions identifies the information relied upon and the assumptions that would change the finding.
This is an economic and financial feasibility analysis. It does not replace dairy facility engineering, environmental or nutrient-management design, veterinary opinion, or ration formulation by a qualified nutritionist. Where a project requires manure-system engineering, a nutrient-management plan, permitting work, or herd-health assessment, those are professional inputs to the economic analysis and the study identifies where it has relied on them.
Related engagements: for feed procurement and custom ration manufacture see our grain elevator and feed mill practice; for fluid, cultured, or branded product manufacture see dairy processing feasibility studies; and where a producer proposes to capture margin beyond the farm gate through processing or branded marketing, a USDA Value-Added Producer Grant feasibility study addresses that programme directly.
A dairy feasibility study consultant determines whether a specific herd, in a specific facility, shipping into a specific milk market, can service proposed debt across the milk-price and feed-cost cycle. The analysis covers production per cow and components, Federal Milk Marketing Order pricing, margin over feed, feed supply and ration cost, herd growth and replacement, parlor and housing capacity, labor, manure management, and coverage under sustained margin compression.
The deliverable is a narrative report and a fully linked financial model prepared for the lender or agency rather than the borrower.
Margin over feed is milk revenue less the cost of the feed consumed to produce it, expressed per hundredweight or per cow. It isolates the two variables that dominate dairy profitability — milk price and feed cost — from the fixed costs that do not move month to month, and it is the measure dairy lenders watch most closely.
We calculate it from the operation’s actual ration at actual inclusion rates and actual prices, not from a published national index, because a national series reflects an average ration and an average milk price rather than a particular farm. What matters for credit is the margin’s historic range, not its current level; coverage is tested at the low end of that range.
Milk price is built from the Federal Milk Marketing Order applicable to the shipping location, using class utilization and component values rather than a single fluid price. Payment is driven substantially by butterfat and protein, so the herd’s actual component tests are used.
The processor agreement is then applied: quality premiums, volume premiums, and hauling and marketing deductions are all real cash items and are modeled at the herd’s demonstrated performance rather than at an aspirational target.
From the herd’s own documented record — DHIA data, herd-management software, or the milk cheques themselves, which are independently generated and therefore the most reliable evidence available. Those records establish pounds per cow per day, the lactation curve actually achieved, and seasonal consistency.
For a new facility with no production history, projections are built from documented performance of comparable operations, held below the comparable mean through the establishment period, and phased to a stabilized level only as the herd settles. A production level the herd has never achieved is treated as a projection requiring evidence.
Purchased concentrate is priced at delivered cost on current quotes with the seasonal purchasing pattern reflected. Homegrown forage is modeled as a production enterprise with its own yield risk, cost structure, and weather exposure rather than as free feed.
Where the operation forward-contracts feed or carries margin protection, that coverage is modeled for the period it actually covers rather than assumed to persist. The analysis also tests whether the forage land base is adequate for the proposed herd size, since an expansion that adds cows without adding acres converts a self-supplied operation into a feed buyer.
Month by month through the biological ramp, because a dairy cannot expand faster than biology permits. Growing from within requires retaining heifer calves and raising them for roughly two years before first calving, absorbing rearing cost with no offsetting milk revenue. Purchasing springing heifers accelerates the ramp but requires cash at purchase and introduces biosecurity risk.
The model carries the heifer inventory needed to sustain the mature herd at the actual cull rate, prices rearing cost for every animal raised, and credits cull cow and bull calf sales when they occur. Foregone heifer sales are shown rather than netted away.
Against the specific facility rather than a nominal cow count. Parlor throughput is a function of stall count, milking routine, turns per hour, and milkings per day, and it determines how many cows can be milked within the hours the labor force actually works. A parlor running three shifts to reach the projected herd carries labor cost and management burden the pro forma must recognize.
Housing is assessed on stall count and pen configuration, with overcrowding treated as a production and health cost rather than free capacity. Maternity, hospital, and fresh-cow space is examined, because insufficient transition housing appears later as production loss and elevated culling.
As a cost centre and a compliance obligation, and at scale as a potential constraint on expansion. The analysis establishes volume generated at the proposed herd size, storage capacity required for the region’s application window, land base available for agronomic application at permitted rates, and hauling cost where the land base is insufficient or distant.
Permit obligations are identified as they apply to the operation’s size and jurisdiction. Where expansion would move the operation into a different regulatory category, the associated capital and ongoing compliance cost appears in the pro forma. We identify these as cost and risk items; we do not provide environmental engineering or permitting opinions.
Through a ten-year pro forma with sensitivity at ±5, 10, and 15 percent applied to milk price, production per cow, and feed cost independently and in combination, plus interest-rate stress from +0.5 to +3.0 percent in half-point increments.
The decisive test is a compressed margin over feed sustained across consecutive periods rather than a single weak month, because dairies fail when compression persists long enough to exhaust working capital. The model reports working capital at its trough and states the milk price and ration cost combination at which coverage falls below the applicable minimum, which is set by the lender and programme rather than by any universal figure.
The fee is fixed and quoted within one business day of the initial inquiry. It does not vary with the finding and is never contingent on loan approval. Because scope varies with herd size, whether the project is an acquisition or a new build, the extent of forage production, and the lending programme involved, we quote after a brief intake conversation rather than publishing a schedule.
Standard delivery is ten to fifteen business days from receipt of a complete data room, with rush delivery available. A dairy engagement typically requires DHIA or herd records, twelve months of milk cheques, the processor agreement, ration sheets and feed invoices, three years of tax returns and a current balance sheet, a facility description with parlor and stall counts, cropland and manure-application acreage, any nutrient-management plan, and the proposed loan term sheet.
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Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.