Dairy farmers face challenges whether they are starting out or established

Published on Tue, 01/20/2009 - 8:46am

Dairy producers and others attend the 42nd annual N.D. Dairy Convention held recently in
MANDAN, N.D. - Dairy producers today run the gamut from young couples just starting out, to generational families continuing in well established multi-family farm businesses, to retiring dairy farmers unable to pass on the dairy farm because their children are moving on to other non-dairy farming careers.

All these kinds of dairy farmers highlighted an engaging panel “Defining the Family Farm” at the 42nd annual N.D. Dairy Convention held recently in Mandan. The panel was designed by J.W. Schroeder, North Dakota State University Extension dairy specialist, so that dairy producers and potential dairy producers could see what ideas and action plans worked or didn't work for other producers and get a conversation going about dairy farming today.

The panel included five dairying families - a family just beginning, an established family, a multi-generational family, and a retired family. The families talked about their operations and answered questions from the audience during the panel discussion. Heidi and Eric Reiter live north of New Salem, in the central region of the state. They have been married two years, work off the farm and also help out Heidi's family on the family dairy farm near New Salem. “Eric and I are working toward a partnership on the farm,” Heidi said,
adding she and her brother are fifth-generation farmers on the family farm. “We're just starting out and it is hard to do, as I'm sure most of you know and can relate to.”
Heidi is currently an agricultural teacher in the Mandan school system, about 30 miles east of the dairy farm. Eric came up to North Dakota four years ago from Cascade, Iowa, and currently works for Northland Dairy.The farm milks from 76-77 cows during the year, with the majority of the cows being Holsteins, but they are also starting to add more Brown Swiss. They also have 1,000 to 1,300 acres of corn, alfalfa, wheat and barley, and raise and market steers. Their milk is sold to DFA (Dairy Farmers of America.) They have a double herringbone dairy parlor. “We raise all our own young stock and we also show at fairs during the summer,” Heidi said.

At this point, there is no way they can farm full-time, according to the Reiters, adding they would have to increase the cow herd to about 150 in order for two families to make a living off the farm. “Milk prices would also have to stay up,” Eric said.

Deb and Jerry Messer dairy farm as part of a large diversified family operation, the Beaver Creek Ranch, in Richardton, in southwestern North Dakota.

“My mom and dad started Beaver Creek Ranch in 1951 and there was not a building there when they started,” Jerry said. “Four of us (out of 11 children) stayed on the farm. With that, I guess my dad had to find enough jobs for us all to do. It has been a diversified farm from day one.” They run a 850-beef cow herd north of the main farm, milk 240 cows and raise all their own young stock. They own their own certified scale to weigh the cattle, and sell on video auction or through private treaty. The crop operation consists of 9,000 acres of wheat, 2,000 acres of oats, and 1,000 acres of corn, Jerry said. There is also 5,000 acres of pastureand hayland.

The four brothers are responsible for heading up a different part of the operation. However, like any busy farm and ranch, they all pitch in and help each other when needed, especially during cattle work, planting and harvest. Jerry works in the dairy and Mark is in charge of the beef herd. Greg is in charge of the crop operation, although they all help with the farming, and Scotty takes care of the calving operation, the feedlot, and also puts up hay. “The same combine we use for the grain business, helps with the feed business,” Jerry said, adding they use the same equipment for all the operations. Two of the wives help with the milking, and one of the wives works off the farm in town. At the dairy farm, Deb and two sisters-in-law, along with some part-time employees, work eight shifts per week, Jerry said. He fills in whatever shift he is needed to fill in. “We put up a new parlor in 1991, which isn't new anymore. At that time we were pretty excited with a double-12 Blue Diamond (parlor),” he said. “We have all Holstein heifers, synchronized and bred.” They milk at 10 a.m. and 10 p.m. “At one time, we had 17 kids on the farm, and they were all in sports, so we switched the milking time hours so we could go to all the activities,” Jerry said.The calving shacks double as a hunting shack. There is no fee hunting. It is just for friends and visitors who come and see what goes on at the farm.
They stay and hunt. “During hunting, it is full every weekend,” Jerry said. Each of the four brothers and their father draws a salary out of the farm for personal income. Anything that is used on the farm is purchased from farm income, not personal income.

One of the main things he and his brothers have realized is they have to take care of the marketing part of the farm, and they need to keep up with technology. “Input costs are the most challenging,” Jerry said. To combat that, they will “contract their inputs.” In other words, they will forward contract fertilizer and other inputs when the market is at the best point. “Put less emphasis on the things you can't control such as milk prices, and control the things you can such as inputs,” he said.

But marketing is a huge challenge. They weren't able to take advantage of the huge wheat prices. In fact, most farmers had to sell their wheat at $6 to $7, because they needed the capital. “We sold one-third at $6, one-third at $7, and one third at $6.50,” he added. At the end of the year, they had 8,000 bushels of wheat left over. Their dad took it to the elevator, and came back grinning with a check for $18.50 a bushel that he got for the wheat.

Jerry said they have two trusts on the farm, a farm trust that protects the farm from leaving the family, and an insurance trust. Only family members are allowed to buy out parts of the farm, he said. Their parents, as trustees, give parts of the trust to family members each year. Sons get ownership in their parents' part of the trust as that becomes necessary. He said they stayed together as brothers to farm because they know the risks of going it alone were very tough. Jerry added farming is not the same as it was when his father started. Risks today are much greater. Deb said she really enjoys the family farm.

Julie and Alan Qual have two grown sons who are both married, Jonathan and Mark, and they have several grandchildren. Their dairy farm is called Qual Dairy, and both boys chose to come back after college and work with the dairy. “One thing we try to do when we sit down to eat is not to talk about business,” Julie said. “It is too easy to get consumed by our dairy business which affects us every day of our lives. There's lots of other things to talk about.” Everyone who works on the farm has their own job from working with cattle to feeding to milking. “When something doesn't get done, we know who didn't do it,” she said. When they were building one of their freestall barns, it became known around town as the Qual dome because it was so big, she said. Their milk truck comes every day to pick up milk. Alan said they have a 500-cow dairy, 100 dry cows, feed out steers and have a grain operation. They do some irrigated farming with alfalfa as well. “We have a feed supply we can rely on that we can put water on,” he said. Alan said their four businesses - dairy, farming, business properties, the grain business uses, and the dairy facility properties - are set up differently than other dairies so that they are able to pass the farm on down when that time comes. “We set everyone up with shares of ownership. The reason we did that was to allow us to transfer property to the next generation,” Alan said. “We wanted to have something to offer them, other than just a job, when they came back to be involved with us on the dairy farm. They will be partners in the business.” He said one of the challenges with the next generation coming home is being able to make them feel as if they are part of the business.“The shares are coming out of my part of the partnership,” Alan said, adding there are three partners currently. As a family, older members have to be willing to give up part of the ownership to the next generation, he added.

“They can't be a partner for five years,” he said. That allows children time to pursue another job or go to college to gain experience to bring back to the dairy farm with them. Then they need to work for the dairy for a year before they become a junior partner with a minority interest, he said. “If you are the sole proprietor, which we weren't, then you can set it up different,” Alan said. “You can do it as one unit.” He said there are a lot of rules and IRS codes to work with. “We are three brothers and wanted to keep this viable for the next generation,” Alan said. “We also have term life insurance in our businesses to protect the future of the farm.”

Another thing Alan encourages dairy farmers to do is to make a business plan and go over it every year. They use Farm Credit Services to facilitate the process for them. “Expect to make changes every year,” he said. Alan said they have it scheduled to meet every other Wednesday mornings with the partners, the fathers and sons to discuss business. “Once a month, we also get together and go over long range plans. That helps us stay on track,” he said.

James Dykema of Dykema Dairy is a dairy farmer south of Stras-burg, in southcentral North Dak-ota. He is single. “I started dairying when I was 15, still in high school,” James said. “My dad wanted to get out of dairying and my grandpa wanted to retire. My grandparents still live in the same yard (at the dairy).” He started out by himself with some part-time help milking 25 cows. His grandpa also has pitched in with the milking over the years. On Nov.13, 1999, the dairy barn burned to the ground. “I had just purchased the farm from my grandpa in 1998,” he said. “This was a nice way to get started in the dairy business.” He said firefighters were able to contain the fire before it consumed the entire free stall barn, and they were able to build the milking parlor on to that barn.

In the free stall barn, the cows “stick their heads out of the barn” to eat from the bunks on the outside of the barn, James said.“Last year we did an eight-way system and we put in the manure storage,” he said. Screens in the manure facility drain the water off the manure, he said. Before he had the facility, he used a skid steer. The manure storage has “really speeded things up” and “made it a lot easier” for him, he said.

The dairy has separate pens for the milking cows and the dry cows. They also put in a heifer feedlot facility that made A-I-ing easier for Dykema Dairy to accomplish each year. “Three weeks ago, I just brought in another 50 cows,” James said. “It's nice to see the cows coming off the trailer instead of going on.” His new herd was mostly a grazing herd that had never been fed a total mixed ration before. Within an hour of getting off the truck, they were eating. At the end of October, he was able to hire a full-time employee to help him. “Now, you can hardly tell there ever was a fire at the dairy,” he said. Just a few posts remain from the burned building. James said he has had to take on a lot of debt, but in his case, he had no choice. With going it alone, and with the fire, he has had to do it this way.

Jack and Kathy Spah are retired dairy farmers in Kidder County with grown sons who have other careers and they are proof “there is life after dairying,” Schroeder said.

The Spahs still farm the land and live out at the farm, but no longer dairy. At one time, they had a dairy, small grains and cow-calf operation. The dairy has changed now. Where they once kept the dry cows, they now use as a storage facility for machinery, Jack said. The main thing that “really made the difference” for them when they were actively dairy farming was “Dairy Diagnostics.”

“Dairy Diagnostics made this farm possible,” he said. “They helped with the production, turning over the ownership of the farm to us, helped with our purchase of hay because we used to raise our own and I got smart and started buying all our alfalfa which made a big difference in the production.” He added Dairy Diagnostics also worked with them on their herd health and coming up with a good dairy ration. “That made our dairy operation a full success,” Jack said. When their children decided to pursue other careers, at least for a time, in August of 2005, they sold the main bunch of their dairy cows. Their dairy heifers were sold last year, the last group to leave the farm.

Kathy is a medical technician who had left to dairy and raise her family full time 25 years ago, but has now returned to the same job in Bismarck she left many years ago. Kathy said while there were many days “milking cows was not my favorite,” it gave them a chance to have the needed income to support two families on the farm at the time. “I'm very, very happy we had the chance to raise our family on that farm,” she said. “The dairy made that possible.” Jack continues to farm the land. Jack also does cell-grazing and has worked with NRCS to put in fall grazing.

Schroeder summed up the panel by saying it is important for dairy farmers to have a good business side of the operation. He encouraged farmers to make contracts, “get everything in writing” and “be businesslike about it.”