This thesis concentrates on a dairy farm expansion and on evaluating suitable alternatives. Two different plans are used as alternatives, which are the expansion of the current production facilities and a completely new byre. The emerging issues in the expansion have been examined in order to be prepared when starting the expansion.

The costs of both plans were also examined as well as possibilities for cost reduction. Cost reduction is not always the best option since functionality has a great impact on the choices. Alter-natives were compared through different calculations in order to evaluate for example their profitability. Different ways to increase the number of livestock were studied to meet the required number of animals to fit the extension. In this thesis there is also an evalutation on the costs which have the greatest impact on profitability.

The both alternatives can be executed in that way that the number of the lifestock would be increased in the current production facilities to fit the new byre. The separate shelter can be built to the heifers so that they can be breed on the farm. The second phase of the development plan will be executed earliest three years after the development phase 1.

The influence of milk price was examined by liquidity ratios. The results will not be shown in this report in detail. The milk price should be at least 30 st/l, so that the farm would be profitable. In the extension the price for a place for one cow should be less than 10 000 €.