An Introduction to Dairy Licensing and Food Law
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Turning the home dairy into a lucrative small business that nourishes the community with healthy, delicious dairy products is a dream for many goatherds.
As goatherds, we all understand the beauty and value of goat milk firsthand. And while the dairy market for it is quite niche in the U.S., others undoubtedly share the same craving. If you’ve studied local-based dairy markets anywhere, you have likely noticed that opportunities for cow milk abound. But when it comes to goats, there are far fewer avenues.
It seems almost unfair. A full array of delectable food products can be made with milk, including fluid milk, cheese, ice cream, butter, cottage cheese, yogurt, and even sour cream. A direct-to-consumer dairy could choose to laser focus on any one of these and have quite a lineup of products to offer.
And, for those who can take that bold step into on-farm milk processing and sales, the rewards are plentiful. But before you start mapping out your business, let’s walk through the realities and hurdles of obtaining the proper licensing and requirements for commercial dairy sales. Even if you’re interested in marketing to an official milk processing plant, there are many requirements.
Milk Market Challenges
Producers of all sizes can face predicaments turning a part-time endeavor into a profitable production system, especially since commercial dairying has many moving parts.
Herd size and location can make a big difference in success or failure. Market availability and state and regional laws concerning the serving and processing of dairy products vary widely.
For example, in some states, like Ohio, it is illegal to sell raw milk or process it into cheese to sell. Thus, it must be marketed in some other way. And that’s only a baseline. There are myriad other details about inspections, facility specifications, and handling equipment.
Regulations like these will vary greatly by state, thus impacting the availability of the market to sell goat products.
Co-ops within states and regions can provide marketing opportunities for various producers. A disadvantage of this route is that co-ops can be hard to join or connect with. In some situations, the only way to join one is to replace a member that is going to leave, which can be infrequent.
If dairy goat owners cannot become part of a co-op or want to be independent, they can invest in the appropriate equipment and pasteurize and bottle or process the milk in accordance with their state food laws.
How many animals are required to turn a profit (or break even) varies wildly depending on the types of products you want to produce, plus any overhead costs for facilities and equipment. Your state extension office or land grant university may be able to put you in contact with specialists who can help you discern break evens.
Major Regulation Considerations
There can be a plethora of licenses and regulations to follow when selling milk in a co-op or through an on-farm processing plant.
As I summarize in an article I wrote for American Dairymen:
“Many smaller and startup goat operations have found it most economical to opt for a Grade B license as opposed to Grade A — Grade B is typically all that is required for many goat cheese processors and one of the simplest licenses to obtain. However, if there is a legal raw milk market or you’re in a region capable of capitalizing on value-added products, it may be necessary to look at the Grade A route.”
The licenses required and the regulations vary among states and require some research to ensure your operation follows local (or state) requirements.
The Pasteurized Milk Ordinance (PMO) of the Food and Drug Administration (FDA) does provide some general underlying guidelines across the board among states and typically refers to the facilities and equipment. Requirements often include specific instructions on how to keep the facilities and equipment properly sanitized to prevent contamination.
The PMO is developed by the National Conference of Interstate Milk Shippers (NCIMS) and spans the construction, milk quality, and operation standards for all dairy operations, including farms, transportation, processing, and pasteurization. In addition, the PMO sets standards for timing, temperatures, and equipment specifications.
“Dairy processing permits are issued at the state level,” explains Kerry Kaylegian in her Penn State extension bulletin, Obtaining a Dairy Food Processing Permit. “In Pennsylvania, all dairy food processors that sell their products must obtain a permit from the Pennsylvania Department of Agriculture through the Milk Sanitation Program.”
According to the Oregon Department of Agriculture, a license is required to produce Grade A milk and market, transport, and process it into other dairy products. Additionally, holders must collect raw milk samples for a dairy operator license and are responsible for pasteurization.
In addition to the state and federal regulations, some dairies may vouch for participating in third-party verification programs to add value to their products. Each program will have its own unique set of parameters to follow, but it could be very worthwhile, especially if it aligns with your method of dairying. This is very popular in niche markets, like goat dairy products, with specific demographics.
Some third-party program examples are labels like grassfed, humane certification, kosher, halal, organic, and antibiotic free.
Don’t Forget to Examine the Market
Due to the cost of regulations and the associated food laws, marketing on any level can sometimes be challenging.
Goatherds who can install their own processing plant also need to consider their marketing options and if there is a big enough target market to move products.
In Ohio, for example, some grocery stores that provide bottled goat milk have to bring it in from out of state and sell very limited quantities (10 to 12 quarts/week).
Producers can get a state license to sell it as pet food due to its composition. Goat milk makes a great alternative to other mammals’ milk, and this creative and practical option allows marketing opportunities to open up for otherwise limited distribution.
Additionally, there is also the option to convert milk into soap and other beauty products that can be sold through farmers markets or online.
If you live in an area with notable ethnic communities or near major cities, look at what markets and stores cater to them and ask about the interest in goat products. In these cases, partnering with a distributor can take some of the marketing burden off your shoulders. Sometimes a presence in these venues, especially ethnic markets, can open doors for direct-to-consumer sales as your farm name gets noticed.
Is it for You?
Beyond a doubt, there certainly is an opportunity to expand the goat milk market and better serve the niche. And while marketing and a ready consumer base for the products are important, having the licenses to move the milk or dairy products is primary.
Remember that your herd is as unique as you are. Be sure to research what options are best for your situation, especially when a diverse (and somewhat limited) market for products exists.
Commercial goat dairying, no matter what level, is a far cry from getting rich quick. It takes hefty upfront costs, time, energy, and lots of dedication — plus a touch of skill. But if you ask dairies who have made it out of a labor of love, you’ll find, more often than not, they believe that it was absolutely worth it.
- Krymowski, J. (2021, September 15). Looking to License Your Goat Dairy? Start Here. American Dairymen. Retrieved January 21, 2023, from https://www.americandairymen.com/articles/looking-license-your-goat-dairy-start-here
- Oregon Department of Agriculture. (n.d.). Dairy Licensing. State of Oregon: Licensing — Dairy Licensing. Retrieved January 21, 2023, from https://www.oregon.gov/oda/programs/foodsafety/fslicensing/pages/dairy.aspx
- Former Farm and Dairy Reporters. (2001, August 9). Ohio’s Got Goats, but Where Does the Milk Go? Farm and Dairy. Retrieved January 21, 2023, from https://www.farmanddairy.com/news/ohios-got-goats-but-where-does-the-milk-go/1473.html
- Kaylegian, K. E. (2021, March 5). Obtaining a dairy food processing permit. Penn State Extension. Retrieved January 21, 2023, from https://extension.psu.edu/obtaining-a-dairy-food-processing-permit
Originally published in the May/June 2023 issue of Goat Journal and regularly vetted for accuracy.