The “Local” Competitive Advantages for Small-Scale Dairies in North Carolina: Profitability Analysis of a Value-Added Product
Team: Gonzalo Alvarez, Krishna Datla, Avaneesh Rajkumar, Ozgun Oral/Spring 2015
Over the past 20 years the dairy industry in North Carolina and nationwide has undergone considerable consolidation with smaller dairies losing ground to larger facilities able to take advantage of labor-saving equipment and other sources of economies of scale. As a result, there has been a precipitous decline in the number of small-scale family-based dairy operations. Interest in “local food,” including local dairy products, has provided a market opening for smaller dairies with value-added operations. This team worked with a small-scale conventional dairy operation that had begun bottling milk on-farm and wanted to better understand the costs and returns of either expanding the bottling operation or starting an on-farm yogurt operation. The MBA team worked to gather costs and expected sales. Their presentation analyzes returns for the yogurt options, and the excel spreadsheet (spreadsheet use requires some business analysis background) created by the team to make these and the bottling operation calculations can be utilized by other small scale dairy farmers to consider their own on-farm value-added options.