Economics of small scale production

[Milkmade]

Hello All,

Sorry if this has been answered elsewhere but my question is on the economics of small scale, i.e. on farm cheese production.

We farm in Wales, UK and have a small cafe on a busy main road about 3 miles from us, from which we sell our milk (goat and cow) as well as using it as an ingredient on our meals and drinks. With the result of Covid and restrictions placed on opening (and it looks like we're heading for the second wave) we've decided to purchase two vending machines to be placed outside the cafe facing passing traffic, one selling the two types of milk and the other for various chilled food types. We already sell our own meat boxes so this is an obvious method of outlet but now, through access to grant funding we've been offered the opportunity to train in making cheese and ice-cream. I've a little experience making soft cheese at home and will receive all the necessary training (and we are already complying with environmental health) but know nothing of the economics involved, i.e. is cheese making profitable?

Obviously every style of cheese has different costs but is there a rough % guide to cost/retail. Artisan cheeses sell well and have a higher price but before we embark it would be good to have an idea of profit. I've looked at cheese recipes and gone through ingredients and suppliers but it's time consuming and I'm unsure how close my figures out there would be for buying in larger bulk.

 Any helpful comments much appreciated.

[mikekchar]

I can't answer your question as I've never done anything like this, however, I can tell you that if you are using your own milk, the other ingredient prices are essentially negligable.  19 liters of rennet is on the order of 350 GBP.  That's enough for 2500 - 3000 kg of cheese.  Cultures will run up to 10 GBP for 100 kg of cheese depending on what you are doing.  You main costs are going to be capital costs and labour.  Well... and waste.  There *will* be a percentage of cheese you don't sell.

For soft cheeses, you can probably count on 15% yield from the milk.  Then if you target 250 grams per cheese (say for a bloomy rind).  Maybe 25p per cheese for rennet and cultures (there are ways to reduce that quite a bit, but let's be conservative).  Let's say you do 200 cheeses a week and charge 4 GBP per cheese, that's sales of 800 GBP per week or about 40K per year.  It will use up about 330 liters of milk a week.  You have to age them for at least 4 weeks, so you need a cave capable of storing 400 cheeses for 2 weeks at 12 C and 90% humidity.  Then you need to wrap 200 cheeses a week and store 400 cheeses in a normal fridge for a further 2 weeks.  You need to flip those 800 cheeses daily.  Also you need to make 40 cheeses a day, 5 days a week.  It's basically a full time job... and it will probably eke out minimum wage after all the expenses.  Profits go up as you scale up, but especially if you are thinking of less volume, it's going to be pretty hard to make money I think.

On the other hand, you might just consider cheese making an experimental venture that isn't intended to make a profit initially.  If you keep the volume down (maybe so that you are only making cheese one day a week), it won't make any significant money, but at least you can test your market.

[mikekchar]

I forgot to mention that Gianaclis Caldwell has a book on the subject: https://www.chelseagreen.com/product/the-small-scale-cheese-business/?sscid=91k4_lmty3  I would definitely read that book.

[Logmax]

I can only answer briefly. Your milk cannot be considered cheaper than the price of regular milk sales. Livestock raising is a separate sport, cheesemaking is also a separate one. Yes, one process strengthens the other, but if you consider cheese making as a business with your own P & L, then you must to count on the usual price of milk from your neighbors. Maybe you need to buy milk on the side for your wonderful cheeses (not "farm" cheese) because of the quality, and subsequently, the quantity.
In general, this is a long discussion about economics. I can only say that in Russia my production can become break-even only when cooking more than 1 ton per month of semi-hard / hard cheeses of seriously high quality.
It's easier to learn how to make simple cheeses and produce them 2-3 days a week in between other activities. So you will gain experience and decide if you have the resource of time and energy. Cheese-making consists of nuances - it was not my idea.