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Expert: Different Mindset Needed for Transition Away from Dairying

by Bev Berens

Published: Friday, May 11, 2018

The cows have been sold and another longtime dairy farmer looks at the surroundings, wondering how to make a living. The life once familiar yet terribly stressful, is gone. The rhythm has changed and so has the objective.

What's next and how to make a living?

As dairy farm numbers continue to shrink—and there seems to be no end in sight for the trend—producers who have transitioned out may worry about the future and what is next.

"It is a business," said Roger Betz, MSU Extension senior business educator. "Just because you quit or transitioned out doesn't make you a failure, and it shouldn't be chalked up as a fail. Dairy farming is a capitalistic system and we praise that system, but it can be a very cruel thing."

Betz went on to explain that approximately every 20-25 years, there is a major shakeup in the dairy industry, and that at present, it is pure capitalism driving changes in the dairy industry.

A first step is to inventory the farm assets, debt level, facilities and resources. Each farm and farmer are different, as is every situation. Running projection numbers with a professional on all potential ventures will help in making sound decisions. Age of operator, proximity to other dairies, condition and age of facilities, debt load and a successor generation are all considerations.

Custom raising heifers is one opportunity to consider as consolidation and specialization within the industry occur and the need grows for specialized management for age-specific cattle. MSU Extension dairy specialists are developing a tool to create financial projections for custom heifer growing broken down by age and responsibilities, such as who performs vaccinations and purchases feed. The tool will give feedback based on different scenarios of how a custom raising operation will perform financially.

"When a farmer transitions out of dairy production and into custom raising heifers, there is a different mindset that has to be embraced," Betz said. "No longer is the farmer the boss, but has now become employee, and may have to make some changes in raising heifers to the client's satisfaction.

While finishing beef cattle may appear to be an attractive alternative, slim margins rarely make it more than a secondary income, but can be especially useful in retirement or semi-retirement age.

Some dairy facilities can transition well to other species such as sheep or goats where animal husbandry skills—while different than dairy—can still be utilized.

Custom planting, harvesting and manure handling services can be reasonable opportunities based on the equipment scale and condition. Realistically evaluate the tools available, time and personal ability or skill set, proximity to potential clients and if the need for custom operators can provide a legitimate income.

Off-farm work on another dairy, in dairy services such as reproduction, nutrition, sales and construction, can all provide space to continue involvement in the dairy industry and removes the stress of ownership which requires overseeing every detail 24 hours per day, every bill, and meeting every payroll.

A dairy farmer transitioning out of ownership has a vast amount of knowledge and skill. This skill set is highly sought after by dairies large enough to have employees specialize in certain farm areas of responsibility. A good employer will respect that experience.

"Remember, you are no longer your own boss and there must be strong communication between an owner and a transitioned dairy farmer," Betz said. "But the employee can provide a valued service to the farm and should carry over the sense of pride in doing any job, just as the individual would on their own farm."

"In my 30 years experience of working with transitioning and retiring dairy farmers, some 200-300 of them, not a single one didn't say it wasn't the right thing to do," Betz added. "Sure, they missed the cows, but in the end, wondered why they hadn't gotten out sooner."

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