On-farm processing -

a beginners guide
December 2007
On-farm Processing A beginners guide
On-farm processing
a beginners guide
Contents
1 Getting Started 2
2 Financial Considerations 7
3 Manufacturing Options 10
4 Technical Requirements 18
5 Marketing and Sales 21
6 Support and Guidance 25
7 Q&A 34
This booklet and the information within are intended as a guide only. Please seek detailed support from your accountant, bank, legal advisor or
other specialist support organisations detailed in Section 6 at the back of this booklet.
December 2007 1
This Milk Development Council Guide to on-farm processing has been developed as a
broad point of reference for those considering diversification into Dairy Product
manufacture. It has been divided into seven easy-to-use sections with a question and
answer section at the back.
Section 1 Getting Started Identifies a number of the pre-requisites
you will need to consider before entering
into a project, including the feasibility
study, assessing opportunities and the
likely resource required.
Section 2 Financial Considerations Will look briefly at the financial aspects
of entering on-farm processing.
Section 3 Manufacturing Options Will review manufacturing options and
look briefly at some successful farm
diversification projects.
Section 4 Technical Requirements Will look at some of the technical and
legislative requirements of your proposed
farm processing operation.
Section 5 Marketing and Sales Will look at aspects of marketing and
selling your chosen product.
Section 6 Support and Guidance Is a reference section of useful contacts
for support and guidance if you decide
to take the project further or need
additional advice.
Section 7 Q&A At the back of the booklet there are a
number of frequently asked questions
(FAQs) with short answers.
This publication is aimed at British dairy farmers paying a levy to the MDC.
Acknowledgments: - Milk Development Council, Datrys Solutions Cyf. and all farm
businesses used in the case studies.
Introduction
2 On-farm Processing A beginners guide
This section will look at:
G
Options for diversification
G
Assessing opportunities
G
Innovation
G
Feasibility study The Project Health Check
G
Resource required
Options for diversification
1. Start from scratch on-farm processing would include a new building,
process etc, with all activities carried out on site, possibly taking guidance from a
specialist food support organisation.
2. Off-farm development in this method you would develop your own ideas,
manufacturing process and commence processing by renting, hiring or using other
peoples facilities.
3. Co-operative start up one or more additional farms may come together with
you to make up a bigger scale venture.
4. Collaborative venture you may be able to add value to your milk by being a
Speciality bulk milk supplier to artisan cheese makers, for example.
5. Purchase of existing business a business may become available, for example
due to the current owners retirement. However it would be rare for this to match
your opportunity exactly.
We will look at these in more detail later in Manufacturing Options
Assessing opportunities
G
Research
Determine the market
You will need to carry out research to establish whether there is a gap in the
market and there is consumer demand.
G
Determine capabilities
Feasibility study
Capital costs
Cost/revenue analysis and return on capital & Cash Flow Forecast
Funding
Technical requirements/standards and accreditation requirements
Consultation with local Environmental Health Officer
Staffing and your capabilities and commitment
Do you have sufficient time and energy to carry the project through
G
Build a business model to support
Funding application
Grant application
Return on investment
As part of this assessment you could consider the details in the product groups in
Table 1.
Section 1 Getting Started
Options for
diversification
Assessing
opportunities
December 2007 3
In order to help identify the funding requirements for the project it is important to
understand the working capital and cash flow requirements. See Table 2 below.
Table 1 - Capital and Complexity
Premises Plant Process complexity
(1 = less complex
5 = most complex)
Notes
Liquid milk Can be basic,
small finished
store, but does
need to achieve
requirements of
local EHO
standards
Milk tanks,
Cleaning in Place
(CIP), separator,
pasteuriser,
homogeniser, filler,
capper and labeller
2
Short shelf life and
varying fat % is
main complexity
A large amount of
second-hand
equipment is
available
Flavoured milk As above As above but with
extra heating and
mixing vessels
3
Ingredients and
batch control and
complexity
As above It
requires specialised
quality equipment
to gain shelf life
Yogurt More complex in
terms of hygienic
design, control and
segregation
Require greater
degree of process
control
3
Use of cultures
and short shelf life
ingredients add to
complexity
Heat treatment/
incubation and
filling machines are
expensive
Soft cheese The ultimate in
hygienic design is
required can be
700/m
Highly specialised
manufacturing
systems and
cleaning equipment
5
There is no market
for sub standard
products
No real supplies of
second hand
equipment new
from Europe
Ice cream More complex in
terms of hygienic
design, control and
segregation
Heating, mixing,
freezing and filling
equipment
4
Flavours etc and
seasonality/stock
build are all issues
A good range of
second-hand small
equipment is
available
Hard cheese Needs hygienic
control and
building finishes
500/m
Basic heat treatment
and simple cheese
manufacturing kit,
but needs large
store
5
Use of cultures
and technology
key to success
Some second-
hand equipment is
available but tends
not to be small
scale. Small scale
= manual
Table 2 - Cash Flow
X = Payment period
Month 1 Month 2 Month 3 Month 4 Month 5
Liquid milk Production X
Flavoured milk Production X X
Yogurt Production X
Soft cheese Production X X
Ice cream Production X X X SEASONAL X SEASONAL
STOCK BUILD STOCK BUILD
Hard cheese Production X X X X
Innovation
Innovation alone does not sell products; the opportunity for the product has to be real.
Innovation starts with an idea and matches this to a consumer need.
Innovation
Diagram 1 - Project Overview
4 On-farm Processing A beginners guide
Feasibility Study The Project Health Check
The adequacy of the research and evaluation process will help underpin the soundness
of your project success and budget assumptions use Diagram 1 as a guide.
Feasibility Study
The Project
Health Check
Pre-design
Project plan
PROJECT
Project Stage
Innovation starts with a consumer need and acts as a start point for the development
of new products and improved production processes.
If you are considering producing a consumer brand or other product remember
G
It is competitive out there as huge battles are ongoing to capture shelf space
and for the attention of the consumer
G
A consumer at the checkout with 100 items in the trolley has already just
rejected some 39900 other products in store
G
These products were mostly good value, tasty, safe, well packaged and
promoted
We will look at this further in Section 5 - Marketing and Sales
Grant funding
Capacities
Services
Planning and
building
control
approvals
Feasibility study
Pre-evaluation Stage
Business plan
Marketing
Market opportunity, costing, pricing,
brands, and routes to market
Margin
volume/analysis
Discussions
potential
distributors and
customers
Research
Plant and design
Process flow, technical
requirements, technological study
Review of
relevant
legislation
Motivations/
objectives
Skills and
competences
Risk analysis
Investment and
earnings analysis
Discussions
Planners,
Environmental
Health
December 2007 5
Once you have a sound, researched project it is time for a review. Use diagram 2 below
Diagram 2 - Where Are We Now?
Project Execution
Project Plan
Objective identified?
Budget Assumptions/Operating Budget
Market Research/Positioning/Routes to Market
Technical and Operating Requirements
Customer Requirements
Before we move forward to the detail of building up a project it is important to re-
check on your personal strategy, motivation and objectives:-
Important questions to ask yourself
G
Why go into processing?
G
What are the expected benefits?
G
What is the target market?
G
What is the target selling price?
G
What resource is available to make it happen?
G
Who is responsible for delivering the project objectives?
G
Have we got a true measure on the cost?
G
Where do we want this business to be?
Can you answer all these points honestly and accurately?
The next stage is to start with a full and comprehensive range of project assumptions.
These will help clarify the basis of information that will be used to build your financial
projections.
Project assumptions
G
Costs and terms Know what the project is going to cost and who will
provide what services.
G
Quality demanded - Equipment fit for purpose, will it achieve shelf life, is it
safe and legal?
G
Technical/accreditation What are the basic requirements, what does
the target market demand?
G
Product objectives - Throughput required, size and shape, labels and
packaging.
G
Budget Assumptions/Operating Budget adding value how much
will it cost, can we do it and maintain a margin?
G
Market Research/Positioning/Routes to Market - Customer base,
product range, gap analysis and products in the market place, what
competitor reaction can we expect, what strategies have we got?
G
Customer Requirements Have you identified a market demand/gap in
the market, how do you get the customers to buy in?
6 On-farm Processing A beginners guide
It is useful at this stage to quantify the project against key timelines often by way of a
chart, including the following:
G
Key dates
G
Approvals
G
Grant applications
G
Feasibility, design and order placement
G
Timetable Construction, mechanical and electrical
Plant delivery and installation
Build up
Commission and test
G
Sensitivities Project delays
Competitor actions/reactions
Legislative requirements
Before agreeing to purchase materials or equipment for your project you should create
a log of potential suppliers who should be clearly briefed as to the scope of the supply
expected. Remember to ensure you have big enough premises and suitable equipment
for todays and future requirements.
The following list may be used as a guide:
G
Purchase definition and specification
G
Supplier selection
G
Quotations and contracts
G
Limits of supply
G
Critical dependencies and inter-dependencies
G
Critical interfaces
G
Process and performance guarantees
G
Design review and functionality
G
Effect of delays or failure of plant/process
G
Insurances, warranties and performance bonds
Additional factors that should be considered are:
G
Project sensitivities failure, missing a key date
G
Contingency planning , critical spares, stand by support and call out
G
Disaster recovery planning risk assessment, key contacts, alternative strategies
Resource required
It is important to split the farm activities, the project and the on-farm processing into
separate areas of activity and responsibility. This will ensure appropriate resources can
be allocated.
You may need to consider the support of:
G
Your accountant, bank manager with the business plan
G
Your architect, with the design and layout of the manufacturing unit and in the
application process for planning and building regulation approval
G
Expert technical advice and assistance for setting up and testing processing and
packaging plant and equipment.
G
Specialist business support from your local food group or independent
marketing advisor
G
Specialist design and marketing for your packaging, labelling and promotional
materials
Resource
required
December 2007 7
Section 2 Financial Considerations
This section will look at
G
Business planning and budgeting
G
The business and project plans
G
Developing a budget
Business planning and budgeting
You will need to detail all your ideas into a well-written business plan and financial
budget. This is required for you to fully understand the costs of the venture, and for
supporting any borrowing or grant funding applications you may make. It will also act
as a benchmark for the business as you move forward.
It is essential that you separate out the costs and revenue streams of your existing farm
business(es) and that the project start-up costs are identified separately in your budget.
This will allow easier month on month and year on year comparisons. It will also give
you a clearer picture of the return your new business venture is delivering.
The business and project plans
Your business plan should start with some fundamental business assumptions.
Business
planning and
budgeting
The business and
project plans
For example:
G
Cost and revenue streams
G
Cost of accreditations and approvals
G
Margin expectations and sales volumes by customer
G
Overall capital costs
G
Costs of finance
G
Anticipated benefits
At this stage it is useful to split this into the initial project plan and a separate operating
business plan.
Your project plan will:
G
Include a time frame or project planner
G
Detail a list of the key activities
G
List of all the project inputs and outputs eg, power, water, effluent
G
Allocate responsibilities to those involved
G
Provide a detailed process description
G
Include a detailed cost plan with supporting quotations
G
Identify details of all non-capital costs such as training, product development or
research
8 On-farm Processing A beginners guide
Example
Estimated Costs
Item Asset code Description New Used
1 MP1 Milk intake pump 1000 400
2 P1 Pasteuriser 15,000 5000
3 CI1 CIP rinse tank 1000
4 CM1 Cheese mill 500
5 WT1 Whey tank 6000
6 CV1 Cheese vat 6000
7 DV1 Draining vat 2000
Contingency
28,000 8900
Developing a budget
Once you have all the detail in your project plan and have identified and quantified all
your business assumptions, this can be developed into a project budget and an
operating budget.
The project budget
This will include a monthly breakdown of all costs in facilitating the project, including:
G
Capital costs (buildings and civil works)
G
Capital costs (plant and equipment)
G
One-off revenue costs associated with the start up (eg, architects fees,
temporary facilities, training and product development costs).
It is useful to detail all of the above by supplier and allow for payment of deposits, stage
payments and any retention payable after commissioning against a cash flow planner.
The objective of the project budget is to help assess the overall project cost and to
allow a visualisation of the flow of money out of the business before manufacturing can
start.
1
1
Your accountant, bank manager or business advisor will be able to advise on the detail preparation of your financial projections.
Developing a
budget
New and second hand equipment costs will vary according to specification, it is
important to ensure that your chosen equipment will meet your initial and future
requirements.
December 2007 9
Your operating budget
When proposing an investment in on-farm processing, the preparation of a detailed
operating budget is important in order to understand;
G
The likely cash requirements to fund the business growth
G
The longer term return you may expect on your investment
G
The additional earnings potential for those involved
G
The long term profitability and its sensitivity to costs, prices and market
movements
A simple analysis of cost and revenue streams will be assisted by your earlier business
assumptions.
Remember - who will buy what, when and at what price?
- what will it cost to produce in materials and labour?
- what will it cost to distribute and support in the market place?
A monthly analysis will probably be sufficient, although depending upon your business
you may need to prepare this detail weekly.
Most dairy based businesses would budget at least monthly for:
G
Sales revenue
G
Milk and ingredients costs
G
Packaging costs
G
Direct labour/indirect labour
G
Labour support costs (recruitment, training)
G
Energy
G
Water and effluent
G
Chemicals and detergents
G
Administration
G
Finance costs
G
Marketing
10 On-farm Processing A beginners guide
This section will look at:
G
Five business options for on-farm processing
G
Four case studies
G
Key manufacturing considerations
Business options for on-farm processing
Option 1 Start from scratch
Section 3 Manufacturing Options
Advantages
G
You can utilise existing labour (own,
family, employees)
G
The project can to some extent
adapt as it develops. Control can
be maintained on-site
G
The branding will potentially be
stronger for a product produced
on-site by the producer/family or
can be linked perhaps to a local
landmark
G
No one knows your business
better than yourself. Your
enthusiasm will be key to its
success.
Disadvantages
G
The expenditure: invariably costly
mistakes (buildings equipment and
branding) will be made unless
technical expertise can be called
upon when required
G
You will need to develop new skills
in production, administration and
marketing.
G
Time resources will need to
increase as you add processing to
your milk production business
G
Grant applications generally rely
upon a plan prior to
commencement, therefore
considerable investment of time
and expertise will be required to
develop a business plan prior to
embarking on the project
Business options
for on-farm
processing
Option 2 Off farm development, processing and packaging
Advantages
G
It will avoid major capital
expenditure up-front
G
It may keep the costs
proportionate to the production
G
You can call on established
expertise and experience
Disadvantages
G
Product development can be
expensive (although grants and
support may be available)
G
Production and product formats,
packaging and branding may be
limited by what the particular
processor can offer
G
You may have to fit into other
peoples time scales and priorities
December 2007 11
Option 3 - Co-operative start-up (the farmer co-op)
Advantages
G
This provides less risk for
producers wishing to own
processing facilities and can
accelerate progress through capital
raising ability
G
You can bring in an experienced
workforce
G
This structure may add to the
marketability of the product if a
particular region or type of milk is
used
G
A larger group may add operating
efficiencies to the project
Disadvantages
G
The development of the project
may be slower or its distinctiveness
diluted through a decision making
progress that accommodates a
larger groups individual needs
G
You need to make sure that all
members of the co-operative have
the same aims and that everyone is
moving in the same direction
G
You will not be able to make
unilateral decisions and
communication will be key
G
Larger quantities of milk will need
bigger sales outlets and marketing
budgets. Remember 1 million litres
of milk makes over 100 tonnes of
cheese
Option 4 - Collaborative ventures supplying added value bulk milk
Advantages
G
You can concentrate on the
production of quality milk on-farm
and should achieve a better milk
price
G
You can limit investment in new
processing facilities and equipment
G
You will not have to learn new
processing skills, however you will
have to learn new marketing and
selling skills for your milk
Disadvantages
G
You may have to invest in a mobile
delivery tank and cleaning system
G
You will not have a direct
involvement in the success (or
otherwise) of your milk purchaser
G
You will need to be meticulous in
the supply of your quality, added
value milk as this is your only
unique selling point (USP)
12 On-farm Processing A beginners guide
Option 5 Purchase of existing business
Advantages
G
There should be existing markets
already being serviced
G
There are existing premises,
equipment and distribution
networks in place
G
Returns, or at least cash, can be
generated from day one
G
Grants may be easier to obtain
where producers in a co-op
develop a business further and
improve ex-farm returns
Disadvantages
G
The capital requirements may be
high and disruption may occur if
new equipment/updating is called
for to improve the product or
efficiency
G
You become a buyer of milk and as
such will want the value for money
and flexibility other milk buyers
demand
G
You need to be very certain what
you are buying and why the existing
owners are selling your
investigations and research into the
business account should uncover
this
December 2007 13
Case Studies
1. Small on-farm processing
cheese - sole trader
Case Studies
Business name: Cotehill
Address: Cotehill Farm, Osgodby,
Lincolnshire
The Davenports have farmed in the
Ancholme valley area of Lincolnshire for 40
years. The farm is mainly level ground and
natural pasture with extensive clover leys.
We were really at a cross roads on the farm with, at the time we went into cheese, all
milk going into one of the major farmer co-ops. We were caught between being
neither specialised nor large enough as a dairy unit to gain economies of scale.
We discussed opportunities with local wholesalers and shops for dairy products made
on the farm and had a favourable response. Our local food group and environmental
health department also guided us in the early stages.
We took the plunge into cheese as there was only one other local cheese maker
giving an obvious gap in the market. It was then down to Mary to gain all the
necessary skills and start developing the recipes whilst we got busy building the dairy.
We manufacture cheese four days a week with the balance of our milk going to our
existing milk purchaser. Looking to the future we need to make more cheese and
market this with wider distribution outside of the East of England.
The key to our success has been the ability to look outside the farm for opportunities,
developing our commercial skills as we went along. It has been hard work but we are
now starting to see the return we always envisaged.
Key facts and figures
Premises: Adapted and upgraded farm building Capital investment: 40,000
Date established: Jan 2005 PPL benefit: Currently 4ppl,
potentially up to 8ppl
Size of business: 184 acres Funded support (grant): DEFRA RES
Grant, NTI Equipment/technology
grant
No of employees: 2 Full time equivalent Business support: Food and Drink
Forum
Owner/Tenant: Tenant Research: used local information,
contacted wholesalers etc
Livestock: 70 cows
Litres produced/processed per annum:
600,000/48,000
Product: Cotehill Blue, Cotehill Yellow
Sales outlet: Local retailers, regional
wholesalers and farmers markets
14 On-farm Processing A beginners guide
Key facts and figures
Premises: Adapted farm buildings Capital investment: 100,000
Date established: July 2005 PPL benefit: Not calculated
Size of business: 50 acres Funded support (grant): Processing
grant, WDA
No of employees: 4 Full time equivalent Business support: None
Owner/Tenant: Owner Research: contacted local
restaurants/hotels, researched food
fairs, contacted Ice Cream Alliance
Livestock: 10 cows
Litres produced/processed per annum: 35,000
Product: Ice cream
Sales outlet: Food fairs, shops, hotels and
restaurants
2. Small on-farm processing ice cream
Business name: Cowpots
Address: Whitland, Pen-y-Back, W.Wales
Brian and Marylou previously farmed in Hampshire
milking 100 Holstein Friesians. Disposing of the herd
and moving to West Wales to start an on-farm Jersey
milk ice cream business was farm diversification with
extreme added value off a low base volume.
It was desperation really, 2 sons, 100 cows and a county
council holding was not going to add up. We had to
make a move. With not a lot of time to research but
with a lot of confidence we made the move in early 2005.
Jersey milk into a premium ice-cream was the obvious choice. From a small amount
of milk we could add significant value and the business divides nicely into the farming,
manufacturing and selling activities.
We put all our own investment in from the outset but have had fantastic support from
the Welsh Development Agency and Welsh Assembly Government, local food groups
and other local businesses.
We attend every show, farmers market, food fair and event we can manage and supply
local theatres, colleges and restaurants.
A venture like this is not for the faint-hearted. It takes a long time for the cash to turn
around and the lead-in time to gain a listing can be a lot longer than you think.
Logically an ice cream parlour would be our next development now we have a
premium quality product with a strong brand name, which is very popular locally.
December 2007 15
3. On-farm processing/direct retail
Business name: Farm Fresh Milk
Address: Hook, Hampshire
Running 55 cows on a 130 acre Hampshire
small holding and the proximity to large
centres of population gave James Hague the
opportunity to enter on-farm processing
which he has subsequently developed into a significant retail rounds delivery service.
With 100,000 houses within a 25 mile radius there was an immediate opportunity to
put farm fresh milk on some of these doorsteps. We approached 6000 with a
promotional flyer and gained 1189! The customer base was out there, we just needed
to access it.
We process all our own milk and supplement this with eggs, fair-trade orange juice,
and bread. The bakery also buys our products for their use so we have found and
developed some reciprocal trading.
We did all our own research and cold calling to build up trade. It is very important to
separate out milk processing from the farm activities so we can then allocate the
correct amount of time to develop the business.
Starting simply, employing a herdsman to release me from the farm was key to our
success. From a simple start with expansion in mind we have moved forward
dramatically in the last two years. We are looking forward to completing our new
processing unit soon. We will then be able to supplement our product range. Possibly
farm fresh butter and dairy desserts will be next!
Key facts and figures
Premises: Adapted farm buildings Capital investment: c 100,000
Date established: 2005 PPL benefit: 5ppl
Size of business: 130 acres Funded support (grant): None
No of employees: 6 Full time equivalent Business support: None
Owner/Tenant: Tenant Research: leafleting/canvassing
support, competitor analysis of
existing milk delivery rounds
operating locally
Livestock: 70 cows
Litres produced/processed per annum: 400,000
Product: Liquid milk, cream and desserts
Sales outlet: Doorstep deliveries, shops,
catering and manufacturers
16 On-farm Processing A beginners guide
4. Collaborative venture Ltd Company
Business name: H&P Jones and Son Ltd
Address: Pantgwyn, Ceredigion, Wales
H&P Jones and Son have farmed 265 acres of
mixed dairy and arable at Synod Inn, Ceredigion
since 1957. The farm is paddock grazed with
arable crops grown to supplement TMR, and for
winter feed. In 2007 H&P Jones and Son
commenced direct supply of milk into
Carmarthenshire Cheese Company and other artisan cheese makers in the local area.
We were becoming increasingly dissatisfied with our milk price return considering we
have always produced in the top quality bands. At short notice the opportunity arose
locally for us to supply milk into a new cheese business which was prepared to pay
specifically for high quality, local, traceable and farm assured milk.
Investing in our own tank, trailer and CIP system was the obvious route to give
flexibility and through this we have been able to gain supply contracts with other small
artisan cheese makers locally.
Achieving a few additional ppl has given us confidence in the future for the farm and
we will shortly complete our new parlour redevelopment which will further increase
efficiencies.
Indirectly our milk goes into three of the top multiple retailers as a number of cheese
products and has been awarded numerous prizes and other accolades in the first 18
months.
One thing we have learnt from this collaborative venture is an openness and honesty
of shared objectives is key so both partners come out of the deal feeling satisfied. We
look forward to supplying more and more milk as we continue to re-invest in the farm.
Key facts and figures
Premises: New CIP installation in Capital investment: 20,000
existing building
Date established: 2007 PPL benefit: up to 7ppl
Size of business: 265 acres Funded support (grant): None
No of employees: 2/3 Full time equivalent Business support: None
Owner/Tenant: Owner Research: evaluated options by
direct contact and by using in-depth
knowledge of local operators
Livestock: 130 cows
Litres produced/processed per annum:
1.2 million litres/500,000
Product: Milk for cheese production
Sales outlet: 3 local artisan cheese producers
December 2007 17
Key manufacturing considerations
Below are a number of key elements essential for running a successful
business.
G
A keenness to maintain meticulous standards of hygiene, product quality and
documentation throughout your business
G
A methodical, detailed approach to recipe development, process control and
general day to day manufacturing
G
An ability to be outward facing in your business, providing support for your
product by being in regular contact with your market
G
The ability to maintain and develop all of the above once your business grows
and demands on your time and expertise increases
Alternatively, subject to the scale of your proposed venture you may be able to employ
a suitably qualified manager or industry expert to help develop and run your project.
This would allow you time to manage or concentrate on other aspects of your
business(es).
Consider these points carefully before embarking on any farm processing
business venture.
Key manufacturing
considerations
18 On-farm Processing A beginners guide
Section 4 Technical Requirements
This section will look at:-
G
Approvals and accreditations
G
Documentation and record keeping
G
The requirements of the customer
G
Food Legislation
As a food manufacturer you are required by law to operate in a safe and hygienic
manner and your products must comply with legal standards for both analysis and
labelling. In addition your documentation must be robust enough to prove if required,
the safety of manufacturing and operations should you need to defend in court (due
diligence).
Approvals and accreditations
You will need to apply to your local council and environmental health department for
registration of your food manufacturing premises. This application will require you to
send copies of drawings and define all relevant parts of your process that are critical to
food safety, eg, pasteurisation. It will also require you to commit to, and have in place
before manufacturing, a number of pre-requisites such as:
G
HACCP Hazard Analysis Critical Control Points
G
Pest control services from a professional company
G
Training
G
Specifications for raw materials etc
G
Specifications for finished products
G
Product testing
Above this level of pre-requisites, the technical standards and understanding expected
of your business will vary depending on both the type of product and likely food safety
risk it represents.
Listed below are examples of the increasing levels of requirements on your technical
support in your business as you increase your sales and distribution.
The market intended for your products will dictate the level of quality management
system you will need to have in place together with any external audit or accreditation
standard you will need to achieve.
1. Essentials for Trading and Environmental Health Officer include:
Examples only
Quality documents signed authorised and dated
Approved Healthmark
Critical Control Point checks
Health and Safety Policy and Statement
Risk assessments
Identification and traceability records and procedure - from incoming goods to raw
materials to despatched product
Approvals and
accreditations
December 2007 19
2. Regional Sales outlets eg, cash and carry, regional supermarkets and distributors
Examples only
Full Quality Management Policies, Procedures, and Record System
Full emergency procedures and contacts list
Contracts and Ethical Trading Initiative
Employee medical reviews
Procedures for Non-conforming product etc
Internal audit schedule and minutes of key meetings
Supplier assessments and specifications
3. National sales outlets
Examples only
External independent customer audits eg,. SALSA (Safe and Local Supplier Approval),
EFSIS (European Food Safety Inspection Scheme), BRC (British Retail Consortium)
External Customer audits eg, Tesco, M&S.
Documentation and record keeping
All documentation and records will need to be accurate, neat and up to date. Milk
quota documentation is complex, however advice is available from the Rural Payments
Agency (R.P.A) whose details are at the back of this booklet. All documentation and
records that are completed should be archived and kept in good condition for five
years. These will include:
G
Approvals and accreditations (as before)
G
Quality systems documentation (factory standards, cleaning etc)
G
Identification and Traceability documents
G
Business accounts (including receipts, invoices, purchase orders etc)
G
Stock control/despatch/incoming goods
G
Quota records and RPA documentation
The requirements of your customer and the end consumer
Your customer is the person who pays you for the product, the consumer is the
person who eats it! it is important to understand that they will have differing
expectations.
Even if you only sell direct to the public at farmers markets or on doorstep deliveries,
the end customer is entitled by law to a safe and legal product. Beyond this there are
few customer requirements other than being satisfied with your product in terms of
quality, taste and value etc.
Once you widen your distribution to include wholesalers and regional shops the level
of technical support your business needs to provide increases.
As a potential supplier to regional supermarkets for example, you would need specialist
training to work with on-line database systems and to be able to respond quickly and
efficiently to any requests for information, usually by e-mail.
Documentation
and record
keeping
The requirements
of your customer
and the end
consumer
20 On-farm Processing A beginners guide
Food legislation
It is important to understand and be familiar with the standards and legislation you will
need to adhere to eg, the Weights and Measures Act and the Food Safety Act. A good
starting point is the Food Standards Agency. This independent government department
are able to give information on food safety and standards.
Food legislation
December 2007 21
Section 5 Marketing and Sales
This section will look at:
G
Market research
G
Innovation, branding and imagery
G
Costing and pricing
G
Routes to market
Market research
It is important to understand why the consumer would want to buy your new
product(s), possibly because:
G
It is cheaper/better value
G
It offers an improved recipe
G
It offers health benefits
G
It is fresher/local
G
It is special or indulgent
You need to do extensive market research in order to create commercial reality from
the idea, including investigations into:
G
Market history
G
Past and future growth rates
G
Competitor technologies
G
Competitor products
G
Sales channels and routes to market
G
Peculiarities of the market (technical/operations/commercial)
G
Market drivers and influences eg, the law
G
Future trends and eating habits
G
Determining the size of the market you intend to access
Innovation, branding and imagery
The whole process of innovation is the starting point for your marketing and sales
strategy. It should revolve around having:
The right product, price, time, production and positioning
The right product
G
Research the opportunity, what is new, what does good look like?
G
How long will the new product development process take?
G
Can we produce consistently high quality product with the proposed equipment
and resources?
Market research
Innovation,
branding and
imagery
22 On-farm Processing A beginners guide
The right price
G
Can we make it for less than the market will pay?
G
Have we got efficient routes to market?
G
What wastage level can we expect?
G
What is the real cost of development, recipe development, tooling and product
support?
The right time
G
Consider the overall project target launch date
G
When to launch seasonal/launch slots
G
Where to launch national/regional/local
G
Right intelligence what is happening in the market place?
G
Right ideas eating habits, awareness of trends
G
When to start manufacture to build stock for launch?
The right production
G
Consider your capabilities
G
Permissions can we use that name/process
G
Accreditations what is the requirement in order to supply
G
Skills and training do we have it, should we outsource, can we retrain
G
Capacity look at the market size assess how much you can supply
The right positioning hitting the gap in the market
G
What makes a good product sell?
G
Convenience, everyday purpose, impulse, snaking, kids meals
G
Pack size, resealable, recyclable, consumer pre-requisites
G
Doorstep, farm gate, regional, national multiple sales
Remember
We didnt know we needed Bio-products until they came onto the market in
the 1980s.
Highly respected brands in one country are often greeted with bewilderment in
another.
Design
All products have an image or brand personality. Your design needs to reflect this.
The consumer will generally be receptive to:
G
New
G
Local/provenance
G
Traceable
G
Improved recipe
G
Better taste
G
Indulgent/good for you
December 2007 23
BUT will be driven by:
G
Value
G
Offers
G
Quality
G
Availability
G
Taste
You can support this with your packaging design and marketing support.
Remember
G
People buy products for rational and emotional reasons
G
Brand image and reputation will be key
G
Your product name and image needs to reflect quality, honesty and value
Costing and pricing
You need to fully cost your products in order to develop a pricing strategy. Before you
issue a price list it is important to ensure that you have built in sufficient margins to
make your business viable.
You should consider:
The lowest acceptable price you will accept
The reasons for the chosen price
Any volume discounts that you may apply
Any early payment terms you may give
How your product compares to your competitors
What is the life cycle of your product before a redesign is necessary?
How price sensitive are your customers?
What margin expectation does each level of distribution have depending on
route to market?
If your product is a highly priced new entrant to the market you will need to
adequately justify the reasons for this conversely a lower priced product does not
always convey the image you may need to differentiate your product in a crowded
market place.
Costing and
pricing
24 On-farm Processing A beginners guide
Routes to market
In deciding your overall sales strategy you will need to assess your routes to market and
how you need to resource your business in order to supply them:
Level 1 Farm gate sales/farm shop sales/farmers markets
Local speciality food shops and markets
Doorstep delivery rounds/local deliveries
Level 2 Regional wholesalers/Food hubs
Regional supermarkets
Speciality food shows and events
Level 3 National multiple retailers
Export
Intercontinental shows and events
Routes to
market
December 2007 25
Section 6 Support and Guidance
A list of useful contacts has been provided that may be able to support you in your
farm processing venture. The list is not exhaustive, much information is now available
online, and also in magazines, periodicals and other publications.
Dairy UK have also developed a comprehensive guide detailing information on where
to source finance, equipment, products, training and knowledge for innovation. This
information can be viewed at www.dairyukinfohub.com
Publications
Farmers Weekly
Farmers Guardian
Grocer
Food Manufacture
Milk Industry
These will often include specialist features ahead of events such as the Dairy Event
For points of reference on market research:
MINTEL global supplier of consumer, media and market research
www.mintel.com
TNS market information and business insight
www.tnsglobal.com
Keynote reports and market intelligence
www.keynote.co.uk
IGD food and grocery information, insight and best practice
www.igd.com
MDC provides essential services that help dairy farmers run profitable businesses
www.mdc.org.uk
General Contacts
British Cheese Board
29 3 Lexington Street London, W1F 9AH
0117 921 1744
www.cheeseboard.co.uk
British Market Research Association
Devonshire House 60, Goswell Road London, EC1M 7AD
020 7566 3636
www.bmra.org.uk/
Business Link
0845 600 9 006
www.businesslink.gov.uk
General Contacts
Publications
For points of
reference on
market research
26 On-farm Processing A beginners guide
Dairy UK Ltd
93 Baker Street, London, W1U 6QQ
Tel: 0207 4867244
www.dairyuk.org
Datrys Solutions Cyf
Boksburg Hall, Llanllwch, Carmarthenshire, SA31 3RN
Tel: 01267 221168, Mobile: 07971 248421
www.datryssolutions.co.uk
Department for Environment, Food and Rural Affairs (Defra)
Customer Contact Unit, Eastbury House, 30-34 Albert Embankment, London, SE1 7TL
Tel: Defra Helpline 08459 33 55 77
www.defra.gov.uk
EFSIS Limited
PO Box 44, Winterhill House, Snowdon Drive, Milton Keynes, MK6 1AX
Tel: 01908 249974
Fax: 01908 609825
www.efsis.com
English Food and Farming Partnership (EFFP)
London EFFP Ltd
45 Ludgate Hill, London, EC4M 7JU
Tel: 0207 2130430
North East Tel: 01457 8203493
North West Tel: 01457 8203493, 01270 58960, 01524 762567
Yorkshire and the Humber Tel: 01430 860552
East Midlands Tel: 01430 860552
West Midlands Tel: 01939 233143
East of England Tel: 01379 586622
South East Tel: 01273 475573
South West Tel; 01884 32605
www.effp.com
Food and Drink Forum
www.foodanddrinkforum.co.uk
Food First
www.foodfirst.co.uk
Food from Britain
4th Floor, Manning House, 22 Carlisle Place, London, SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515
www.foodfrombritian.com
Food Standards Agency
Kingsway, London, WC2B 6NH
Helpline (enquiries) 020 7276 8829
www.foodstandards.gov.uk
December 2007 27
Guild of Fine Food
www.finefoodworld.co.uk
IGD (Institute of Grocery Distributors)
Grange Lane, Letchmore Heath, Watford, Hertfordshire, WD25 8GD
Tel: 01923 857141
www.igd.com
I Love Cheese
Jane Marshall (Features Editor)
I Love Cheese, Daresbury Point, Green Wood Drive, Manor Park, Cheshire, WA7 1UP
www.ilovecheese.co.uk
Leatherhead Food International
Randalls Road, Leatherhead, Surrey, KT22 7RY
Tel: 01372 376761
www.leatherheadfood.com
London Restaurants Guide
all publications can be purchased directly from:
Monomax Limited, Quadrant House, 250 Kennington lane, London, SE11 5RD.
For further information or details of how to obtain a printed copy of Square Meal of
Square Meal The Magazine, contact :
Tel: 020 27820222
www.squaremeal.co.uk
Milk Development Council (MDC)
Trent Lodge, Stroud Road, Cirencester, Gloucester, GL7 6JN
Tel: 01285 646500
www.mdc.org.uk
National Farmers Retail and Markets Association (FARMA)
12 Southgate Street, Winchester, SO23 9EF
Tel: 0845 4588420
www.farma.org.uk
National Farmers Union
Agriculture House, Stoneleigh Park, Stoneleigh, Warwickshire, CV8 2TZ
Tel: 024 76858500
www.nfu.org.uk
Organic Farmers and Growers
Elim Centre, Lancaster Road, Shrewsbury, Shropshire, SY1 3LE
Tel: 0845 3305122
www.organicfarmers.co.uk
Rural Payments Agency Helpline (dairy schemes included)
01392 266466
www.rpa.gov.uk
28 On-farm Processing A beginners guide
SALSA
c/o Bloxham Mill, Barford Road, Bloxham, Banbury, Oxfordshire, OX15 4FF.
Helpline: 01295 724248,
Fax: 01295 722821
www.salsafood.co.uk
Slow Food
www.slowfood.com
Soil Association
South Plaza, Marlborough Street, Bristol, BS1 3NX
Tel: 0117 314 5000
www.soilassociation.org
Somerset Levels Best
Levels Best, Unit 10/11 Bridge Barns, Upton Bridge Farm, Long Sutton, Langport,
Somerset, TA10 9NJ
Tel: 01458 241401
www.levelsbest.co.uk
Specialist Cheesemakers Association
17 Clerkenwell Green, London, EC1R 0PD
Tel: 0207 253 2114
www.specialistcheesemakers.co.uk
Speciality Food Magazine
Nicola Mallett (Editor)
25 Phoenix Court, Hawkins Road, Colchester, Essex, CO2 8JY
Tel: 01206 505981
www.specialityfoodmagazine.com
The British Retail Consortium
2nd Floor, 21 Dartmouth Street, London, SW1H 9BP
Tel: 020 7854 8900
Fax: 020 7854 8901
www.brc.org.uk
The Cheese Web
Eclectic Events Ltd, Island House, Lower High Street, Burford, Oxfordshire, OX18 4RR
Tel: 01993 823215
www.thecheeseweb.com
The Dairy Council
Henrietta House, 17-18 Henrietta Street, Convent Garden, London, WC2E 8QH
Tel: 0207 3954030
www.milk.co.uk
The Ice Cream Alliance Ltd
3 Melbourne Court, Pride Park, Derby, DE24 8LZ
Tel: 01332 203333
www.ice-cream.org
December 2007 29
The London Source
Dewberry Redpoint Ltd, Apex House, London Road, Northfleet, Kent, DA11 9JA
Tel: 01474 574400
www.thelondonsource.co.uk
The Society of Food and Hygiene Technology
The Granary, Middleton House Farm, Tamworth Road, Middleton, Staffs, B78 2BD
Tel: 01827 872500
www.sofht.co.uk
Visit Britain
Thames Tower, Blacks Road, Hammersmith, London, W6 9EL
Tel: 020 88469000
www.visitbritain.com
Regional contacts
Berkshire, Buckinghamshire & Milton Keynes and Oxfordshire (UK) Food Group
Berkshire, Tel: 01635 523857
Buckinghamshire and Milton Keynes, Tel: 01296 383345
Oxfordshire, Tel: 01865 484116
www.local-food.net
www.buylocalfood.co.uk
Chamber of Commerce Herefordshire and Worcestershire
Head Office, Severn House, Prescott Drive, Warndon Business Park
Worcester, WR4 9NE
Tel: 0845 6411641
www.hwchamber.co.uk
Deliciously Yorkshire
www.deliciously-yorkshire.co.uk
East Midlands Fine Foods
New Brook House, 385 Alfreton Road, Nottingham, NG7 5LR
Tel: 0115 8758892
www.eastmidlandsfinefoods.co.uk
EMDA
Food and Drink Forum East Midlands Fine Foods
www.foodanddrinkforum.co.uk
Tel: 0115 9758810
Food Centre Wales
Horeb Business Park, Horeb, Llandysul, SA44 5NG
Tel: 01559 362230
www.foodcentrewales.org.uk
Regional contacts
30 On-farm Processing A beginners guide
Food Northwest
The Heath Business and Technical Park, Runcorn, Cheshire, WA7 4QX
Tel: 01928 511011
Fax: 01928 581330
www.nwfoodalliance.co.uk
Food Yorkshire and The Regional Food Group
Leeds (Head Office)
Victoria House, Victoria Place, Leeds, LS11 5AE
Tel: 01274 386900
Renaissance South Yorkshire
Renaissance House, Adwick Park, Wath, Rotherham, S63 5AB
Tel: 01709 766500
Hull
D5 Marina Court, Castle Street, Kingston-Upon-Hull, HU1 1TJ,
Tel: 01482 599000
York
Spitfire House, Aviator Court, Clifton Moor, York, YO30 4GY
Tel: 01904 693335
www.foodyorkshire.com
Hampshire Fare
P.O. Box 211, Winchester, Hampshire, SO23 8WB
Tel: 01962 845999
www.hampshirefare.co.uk
www.buylocalfood.co.uk
Heart of England Fine Foods
P.O. Box 1, Much Wenlock, TF13 6WH
Tel: 01746 785185
www.heff.co.uk
National Assembly for Wales
Tel: 0845 0105500
www.assemblywales.org/
Northumbria Larder
P.O. Box 137, Hexham, Northumberland, NE47 6WZ
Tel: 0845 4562340
www.northumbria-larder.co.uk
NW Fine Food
Technology Management Centre, Moss Lane View, Skelmerdale, Lancashire, WN8 9TN
Tel: 01695 732734
www.nwfinefood.co.uk
December 2007 31
Produced in Kent
Bourne Grange Stables, Tonbridge Road, Hadlow, Tonbridge, Kent, TN11 0U
Tel: 01732 853170
www.produceinkent.co.uk
www.buylocalfood.co.uk
Scottish Food and Drink
Tel: 0845 6013752
www.scottishfoodanddrink.com
Scottish Environment and Rural Affairs Dept (SEERAD)
Tel Enquiries: 08457 741741
www.scotland.gov.uk/Home
Scottish Food and Drink Food Innovation and Research Centre
School of SLM, Sheffield, 31 1WB
Tel: 0114 225 3356
www.scottishfoodanddrink.com
SEFGP Ltd
Unit 21, Broadmarsh Business Centre, Harts Farm Way, Havant, PO9 1HS
Tel: 023 9245 2288
www.southeastenglandfoodanddrink.co.uk
Shropshire Chamber of Commerce and Enterprise
Trevithick House, Stafford Park 4, Telford, Shropshire, TF3 3BA
Tel: 01952 208200
www.shropshire-chamber.co.uk
South West of England Regional Development Agency
Corporate Headquarters
Tel: 01392 214747
www.southwestrda.org.uk
Surrey Food Links
Room 404, County Hall, Kingston upon Thames
Tel: 020 85419013
www.surreyfoodlinks.co.uk
www.buylocalfood.co.uk
Taste of Anglia
The Barn, Burnt House Farm, Wash Lane, Witnesham, Ipswich, Suffolk, IP6 9JE
Tel: 01473 785883
www.tasteofanglia.com
Taste of Sussex
Sussex Enterprise, Greenacre Court, Station Road, Burgess Hill, West Sussex, RH15 9DS
Tel: 0845 6788867
www.atasteofsussex.co.uk
www.buylocalfood.co.uk
32 On-farm Processing A beginners guide
Taste of the West
Agriculture House, Pynes Hill, Rydon, Exeter, EX2 5ST
Tel: 01392 440745
Cornwall office 7 The Courtyard, Trewolland Farm, Liskeard, Cornwall, PL14 3NL
Tel: 01579 349363
Gloucestershire office Chargrove House Business Centre, Main Road, Shurdington,
Cheltenham, Gloucestershire, GL51 5EA
Tel: 01242 864158
www.tasteofthewest.co.uk
Welsh Assembly Government
Cathys Park, Cardiff, CF10 3NQ
Tel: 0845 0103300
www.wales.gov.uk
Welsh Development Agency
Food and Market Development Division, Welsh Assembly Government, Brunel House, 2
Fitzalan Road, Cardiff, CF10 3AH
Tel: 0845 0103300
www.foodwales.com
Yorkshire Forward
Head Office, Victoria House, Victoria Place Leeds, LS11 5AE
Tel: 0113 3949600
www.yorkshire-forward.com
Yorkshire Regional Food Group
2 Grimston Grange, Sherburn Road, Tadcaster, North Yorkshire, LS24 9BX
Tel: 01937 830354
www.rfgyh.co.uk
Courses/training
A.B. Cheesemaking
7 Daybell Close, Bottesford, Nottingham, NG13 0DQ, UK
Tel/Fax: 01949 842867
www.abcheesemaking.co.uk
Food Centre Wales
Horeb Business Park, Horeb, Llandysul, SA44 5NG
Tel: 01559 362230
www.foodcentrewales.org.uk
Food Innovation Service
Duchy College,Stoke Climsland, Callington, Cornwall
Tel: 01579 372353
innovation@duchy.ac.uk
www.foodinnovation.co.uk
Courses/training
December 2007 33
Food Technology Centre
Coleg Menai, Llangefni
www.foodtech-llangefni.co.uk
Hartpury College
Hartpury House, Gloucester, GL19 3BE
Tel: 01452 700283
Food and Drink Manufacturing courses
www.hartpury.ac.uk
Peak District Dairy Wagon
Alton Mill Farm, Wirskworth Road, Idridgehay, Belper, Derbyshire, DE56 2SH
Tel: 01773 550832
www.dairywagon.co.uk
Reading Scientific Services Ltd
Science &Technology Centre, The University of Reading, Earley Gate
Whiteknights Road, Reading, RG6 6BZ
Tel: 0118 935 7346
www.rssl.com/Contact/Locations/TrainingCentre/
Reaseheath College
Food Technology and Manufacturing courses
Nantwich, Cheshire, CW5 6DF
Tel: 01270 613242
www.reaseheath.ac.uk
Scottish Agricultural College
General enquiries to SAC Central Office
Tel: 0131 535 4000
www.sac.ac.uk
The Ice cream Alliance Ltd
3 Melbourne Court, Pride Park, Derby, DE24 8LZ
Tel: 01332 203333
Fax: 01332 203420
www.ice-cream.org
If you are a supplier and wish to be added to this list please contact the MDC.
34 On-farm Processing A beginners guide
Section 7 Q & A
This section contains FAQs on:
G
Getting started
G
Financial considerations
G
Business structures
G
Technical requirements
G
Marketing and sales
G
Support and guidance
Getting started
Q. What is on-farm processing?
A. On-farm processing is the conversion of milk into any dairy product for sale.
Q. Are there special skills needed?
A. Yes you will need to understand dairy processing techniques.
Q Are there special requirements, legislation etc?
A. Yes, you will have to meet the requirements of your local Environmental
Health Officer (EHO) who represents the Food Standards Agency (FSA) and
all other legislation applicable. You can get guidance on this from business
support organisations.
Q. Why might I want to get involved?
A. It may be possible to add value to your base milk through careful on-farm
processing.
Q. How much additional time will an on-farm processing operation take?
A. This really depends on the nature and scale of your new enterprise. Small-
scale enterprises tend to rely on everyone getting involved, while larger
projects may employ staff, a manager or other specialist support staff.
Financial Considerations
Q. What is the cost of starting on-farm processing?
A. This depends on the products you intend manufacturing and whether you
use new or second hand equipment. For guidelines see MDC factsheet.
Q. What grant support is available to kick-start my venture?
A.. Grant funding schemes vary in their availability, level of support and your
eligibility may be a factor.
Q. How will I know the costs of starting on-farm processing?
A. You will need to prepare a detailed project budget possibly with the support
of your accountant, bank manager or specialist business advisor.
Getting started
Financial
Considerations
December 2007 35
Q. How will I know my production costs and how will I know what price to
charge?
A. Only once you have gathered all your investment and production costs will
you be able to calculate you product costs, margins and selling prices. The
price you charge will depend on the product USP (unique selling point) and
the market you are operating in.
Q. What milk price in ppl (pence per litre) should I expect to charge into the
new processing venture?
A. This is only possible to calculate once the overall business budget is
complete. The farm and processing enterprises will need to be kept
separate in order to maintain clarity.
Q. I am unlikely to use all my milk in the first year. Will my current milk
purchaser be happy to take the surplus or supply small intermittent
volumes?
A. You will need to have open and frank discussions with your current milk
buyer regarding any new form of contract you require.
Q. What business structure should I adopt? Sole trader, partnership, limited
liability partnership, limited company, co-operative?
A. Your accountant and financial adviser will assist you in choosing an
appropriate structure for your business.
Q. How can I ensure I keep on track with expenditure and income?
A. You are best to invest in a computer with a suitable accounts package.
Collection of monies owed Cash flow is vital.
Business structures
Q. What is the best diversification option? Start from scratch, off farm
development, co-operative, collaborative venture or purchase of an
existing business?
A. Each on-farm processing project will have an optimum structure. This will
become apparent as part of your detail pre-project feasibility study.
Q. Are the risks of failure greater with any particular structure?
A. Not really all business structures are equally sound but all require a full
business plan and budget with sound commercial assumptions behind this.
Q. I am considering finding an added value processor who may pay a premium
for my milk. How will I know it is suitable?
A. All milk for dairy processing needs to be of high quality in terms of Somatic
Cell Count and Bactoscan. It also needs to be legal ie, free from antibiotics
and of suitable compositional value. The cash net value in terms of fat and
protein will depend on the end use.
Q. If I process only my own milk do I have to do extra paperwork?
A. Yes, you will have to complete all records as required by the RPA.
Business
structures
36 On-farm Processing A beginners guide
Technical requirements
Q. How will I know what technical standards will be expected of my new
business?
A. Your local Environmental Health Office will be able to advise on the pre-
requisite for your food business. Your customers will also guide you as to
their expectations.
Q. How will I know what labelling/nutritional information may be required for
my product?
A. Your local trading standard officer will be able to advise you with this. It is
important you do not make any claims you cannot substantiate.
Q. If I need an accreditation standard how do I know which one will suit me
and what does EFSIS, SALSA, BRC mean?
A. This is generally led by your customer requirements - EFSIS (European Food
Safety Inspection Scheme), BRC (British Retail Consortium) are a similar
standard. SALSA (Safe and Local Supplier Approval) is for smaller processors.
Q. Will my premises need an inspection for approval before I start
processing?
A. Yes, your local Environmental Health Officer will inspect, approve and issue a
health mark for your processing site
Q. I work from a farm so how can I ensure I can achieve and maintain
excellent cleaning standards.
A. Find a reputable chemical supplier company and get them to visit and advise
you.
Marketing and sales
Q. I have a great idea but how can I find out if the product will sell ?
A. Market research and a possible test market is the only way to be certain of
products chances of success. Do not rely on a nice sounding name or
opinions of friends and family.
Q. How will I know what margin my customer expects from a product?
A. Talking to others in the trade will help with this; generally the level of %
mark-up will be similar across the trade.
Q. How will I know where my local/regional distributors are and if they will
take my product?
A. The Internet is a good starting point - you will find most distributors,
speciality shops and wholesalers have their contact details listed. You will
need to present your product ideas.
Q. How will I know what size/shape is best for my proposed new product?
A. Research what sells already. What price is it and how is it packaged? Can
you sell for less or improve on ideas already in the market place and charge
more?
Marketing and
sales
Technical
requirements
December 2007 37
Support and guidance
Q. I want to start on-farm processing. Who do I turn to for advice?
A. Your accountant, business advisor or bank manager are a good starting point.
You should also see the contacts section included in this booklet.
Q. Where can I learn the dairy processing skills required?
A. There are a number of dairy based courses run by both colleges and private
businesses. See the contacts section of the booklet.
Q. Where can I do some pilot trials?
A. An existing manufacturer may be able to help or one of the dairy colleges or
product development centres listed at the back of the booklet. Alternatively
an equipment manufacturer may have trial facilities.
Q. What marketing and selling support is available and how can I learn these
skills?
A. Your local regional development agency or regional food group should be
able to help. They may also offer short courses on marketing and selling.
You will also receive signposting to an appropriate organisation if you contact
the MDC.
Support and
guidance
Disclaimer: The MDC seeks to ensure that the information contained within this publication is accurate. However, the MDC shall not in any event
be liable for loss, damage or injury howsoever suffered directly or indirectly in relation to information contained within this publication, and no
liability will be accepted for errors or omissions.
The contents of this publication may not be reproduced in whole or in part without the consent of the MDC.
Milk Development Council
Stroud Road, Cirencester GL7 6JN
Telephone: 01285 646500
www.mdc.org.uk
www.mdcdatum.org.uk
Milk Development Council 2007