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Serving: WI

Agrivision: Plan your dairy expansion carefully

Agrivision: Plan your dairy expansion carefully
Our Agrivision panel answers a question about expanding the farm for a son returning from college.

Question: My son graduated from college in May and came back to the farm. We are planning to expand our 125-cow herd to 300 cows this fall. My question is, should we raise our heifers in the old 72-cow tiestall barn, or should we send them to a custom heifer raiser? We would probably need to spend about $35,000 to renovate the old barn and make it efficient to raise heifers. Our other option is to build a hoop barn or three-sided heifer facility. What do you think is our best option?

This is a perfect time to complete a partial budget analysis comparing raising your own heifers vs. sending them to be custom raised.

Hodorff: With your son coming back to your operation, heifer raising could be the least of your concerns. One of your first objectives would be to decide some long-range planning. My question would be why are you expanding?  If your son is truly interested in dairying, have him find off farm work and see how he feels after being employed by another business. Why would you spend capital for an unknown purpose. What will you do if it doesn’t work out with your son? If you are expanding to make your operation big enough to include your son, have him bring capital to your business. These concerns may be some good starting points to create some discussion around your expansion. To answer your question about renovating an old barn that would not be my choice.

Miller: There are several considerations to keep in mind as you evaluate your heifer raising options.  Besides the renovation costs, do you have the labor to handle the increased animal numbers?  What about feed storage, handling capacity and land base to handle the increased cow and young stock numbers?  Who will manage this enterprise? You also need to evaluate the cost of raising your own heifers vs sending them to a custom raiser. This is a perfect time to complete a partial budget analysis comparing raising your own heifers vs. sending them to be custom raised. A Qualified Dairy Business Consultant or Extension ag agent or farm technical college trainer can assist in completing this analysis.

Wantoch: Any type of business expansion should be well planned. Hopefully you’ve worked with a consultant, banker or Extension agent to review all of the facets that should be considered, such as feed requirements, land base, labor needs, etc., and developed cash flow projections. You have not mentioned if you have discussed farm succession plans now that your son will be joining the farm. What will be his role and responsibilities? What are your son’s future plans? While farmers struggle to have all of these items worked out before any change, it is essential to ensuring that your business expansion will be successful upon completion of construction and for the future.

Agrivision panel: Doug Hodorff, Fond du Lac County dairy farmer; Sam Miller, managing director, group head agricultural banking BMO Harris Bank; and Katie Wantoch,  Dunn County Extension agricultural agent specializing in economic development. If you have questions that you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919 or e-mail them to [email protected]

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