Americans are drinking less fluid milk, but their taste for dairy is not waning. In fact, USDA data released last month shows that per capita consumption of dairy products has climbed from 539 pounds in 1975 to 607 pounds in 2013.

In her World Dairy Expo seminar, "Exploring value-added dairy opportunities," Sarah Cornelisse, senior extension associate from Penn State University, commented on this dairy demand growth, particularly in the areas of specialty or value-added products. She noted a surge in the number of raw milk permits, artisan cheese plants and milking goat and sheep farms in the state of Pennsylvania as just a few indicators to the demand and interest in value-added dairy products.

What constitutes a value-added product? According to the USDA definition, it includes:

• A change in the physical state or form of a product (such as milling wheat into flour or making strawberries into jam).
  
• The production of a product in a manner that enhances its value (such as organically produced).
  
• The physical segregation of an agricultural commodity or product in a manner that results in the enhancement of its value (such as an identity preserved marketing system).

Why consider a value-added enterprise? Cornelisse touched on several reasons people consider value-added enterprises, including improved profitability or sustainability of a dairy business, a passion for a certain product or an opportunity to support another family or generation at the current farm size. Before moving ahead with an idea, though, Cornelisse asked producers to consider the following questions:

• Do I want this?
  
• Are family members interested and in agreement to the plan?
  
• Is this right for the farm?
  
• Do I have (or have access to) the skills or knowledge necessary to start and run such a business?
  
• What additional resources will I need? Do I have access to the right resources and people?
  
• What is the profit potential of the business?

She also reminded producers to review federal and state regulations. "Each state is slightly different in what they do," she explained.

If a value-added enterprise seems like a good fit, Cornelisse also recommended doing market research to see what products people are interested in. "Everyone has ideals of what they aspire to and then what they actually do," she said in regards to consumer actions. Before diving into a market segment, you need to feel confident people will actually pay for the products they say they want.

Doing market research, and then following a well thought out marketing plan, are "cornerstones to any successful enterprise," according to Cornelisse.

"You also have to know your cost of production," she said. She highly encouraged producers to seek out educational opportunities in their area of interest and create a business plan before diving into a value-added enterprise.

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The author is an associate editor and covers animal health, dairy housing and equipment, and nutrient management. She grew up on a dairy farm near Plymouth, Wis., and previously served as a University of Wisconsin agricultural extension agent. She received a master's degree from North Carolina State University and a bachelor's from University of Wisconsin-Madison.