How Much Does It Cost to Start a Dairy Farm?

Nate Jones, CPCU, ARM, CLCS, AU
4 days ago
3 min read

Starting a dairy farm can be rewarding, but it requires careful planning and realistic budgeting. From purchasing cows and equipment to building barns and securing insurance, knowing the full range of costs upfront is essential for profitability.

1. Land and Facility Costs

Land is the most expensive investment on any dairy farm.

Typical Costs:

Land Purchase: $3,500–$15,000 per acre (depending on state)
100 acres (recommended minimum): $350,000–$1,500,000
Barn / Milking Parlor Construction: $100,000–$500,000
Feed Storage (silos, hay barns): $15,000–$100,000

Most small- to mid-size farms start on leased land or inherited property to lower costs.

2. Livestock Costs

Your herd is the heart of the business. Dairy cows are expensive upfront but provide long-term return.

Typical Costs:

Holstein or Jersey Dairy Cow: $1,200–$2,500 each
Starter Herd (20 cows): $24,000–$50,000
Replacement Heifers: $800–$1,800 each
Veterinary & Vaccination: $150–$300 per cow/year

Learn More: American Dairy Association – Dairy Cattle

3.Dairy farms require specialized milking and storage equipment.

Typical Costs:

Milking Machines/Parlor Systems: $30,000–$150,000
Milk Cooling & Storage Tanks: $15,000–$50,000
Tractor: $20,000–$80,000
Feeders & Water Systems: $5,000–$25,000
Utilities & Plumbing Setup: $10,000–$40,000

Feeding your cows correctly is ongoing and one of your highest recurring costs.

Typical Annual Costs:

Hay, Silage, Corn: $800–$1,500 per cow/year
Supplements, Minerals & Vitamins: $50–$150 per cow/year
Winter Feed Reserves: $5,000–$25,000 depending on herd size

For a starting herd of 20 cows, expect $16,000–$30,000 per year in feed costs.

Learn More: American Dairy Association – Feeding & Nutrition

5. Labor Costs

Labor is essential for milking, herd care, feeding, and farm management:

Full-time and seasonal workers
Payroll taxes and benefits
Training in safety and animal care

Reliable Resource: USDA – Farm Labor Statistics

6. Insurance and Risk Management

Insurance is critical for protecting your farm investment. A basic insurance package for a dairy farm, starting around $2,000 per year, typically includes:

General Liability Insurance: Covers accidents or injuries to visitors, customers, or employees on your farm
Commercial Property Insurance: Protects barns, milking parlors, feed storage, and other farm structures
Commercial Auto Insurance: Covers farm vehicles, trucks, and trailers used for operations
Livestock Insurance: Protects cows from disease, accidents, or natural disasters
Workers’ Compensation Insurance: Covers employees if they are injured on the job

typically starts around $2,000–$12,000 per year, depending on farm size, number of cows, equipment values, and employee count.

Proper coverage ensures that unexpected events won’t derail your farm operations.

Wexford Insurance specializes in dairy farm coverage, helping you tailor policies to your specific farm needs.

7. Additional Costs to Consider

Utilities: electricity, water, and waste management
Veterinary and health care expenses
Marketing and distribution of milk products

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Loan interest and financing fees

Total Estimated Startup Cost

Here’s a simple snapshot:

Category	Cost Range
Land (100 acres)	$350,000–$1,500,000
Barn + Facility	$100,000–$500,000
Cows (20 head)	$24,000–$50,000
Equipment	$60,000–$300,000
Feed (first year)	$16,000–$30,000
Labor (first year)	$50,000–$70,000
Insurance	$2,000–$12,000
Total	$602,000–$2,462,000

Final Thoughts

Starting a dairy farm requires careful investment in land, livestock, equipment, labor, and insurance. Proper planning and securing the right insurance coverage ensures your farm is protected, sustainable, and positioned for profitability.

Protect your dairy farm with Wexford Insurance.

Contact us today.