Immigrants, entrepreneurs changing the face of Wisconsin dairying
A decade ago the future for dairy farmers in Wisconsin looked about as promising as work in a typewriter repair shop. Based on the declining number of dairy farms and milk production, the future of the state’s cheese producers looked equally grim.
About 90% of Wisconsin’s raw milk is used to make cheese. California dairies were running trade ads to lure dairymen and cheesemakers to their state, to be followed by equipment suppliers and the satellite infrastructure that evolves around the dairy industry.
During the past 40 years the number of Wisconsin dairy farms has dropped from 140,000 to 18,000. The median age of dairymen is over 50, and farms have experienced a brain-drain of talented young people. The state continues to lose 2,000 dairy farms a year.
Since l988, when milk production peaked in Wisconsin, the dairy state has fallen from first to fourth place behind California, Idaho and New Mexico in milk production. On the positive side of that statistical gloom, Wisconsin’s dairy farmers employ 190,000 people and generate $17 billion in gross product. That’s a sizeable contribution to the state’s economy – a contribution that state government decided it didn’t want to lose.
In an effort to stimulate new interest in the technology available, then-Gov. Tommy Thompson launched the Dairy 2020 Initiative in l993. Since then, more than $1.6 million in grant money has been provided for start-ups, modernization and expansion. Tim Griswald of the Department of Commerce heads the program. Local governments such as Buffalo County have their own Internet Web sites proclaiming the benefits of their region to prospective dairy farmers.
Despite the continuing loss of small family farms, the volume of milk being produced stopped declining in l997. Today, 22% of the existing farms milk more than 200 cows, and the industry trend is toward consolidation with larger milking herds.
In the past five years more than $1 billion has been invested in Wisconsin farms. Some of that new money is coming from the Netherlands, where wealthy dairy farmers are being forced out by high land prices, a quota system that freezes growth, and strict environmental controls. Additional outside-of-the-state money has come from southwestern dairymen establishing farms in Wisconsin.
Benny Bredek, a Netherlands dairy farmer, immigrated to Canada, where he was stymied by the same quota system that he faced back home. Instead of milking cows, Bredek operates a real estate company in Fond du Lac along with another business he formed called Wisconsin Farm Relocation Service. He assists Dutch dairy farmers in relocating to Wisconsin.
The Netherlands is one-fifth the size of Wisconsin, Bredek explained. It has 16 million people and 30,000 dairy farms. They’re running out of space. Farmland sells for $15,000 an acre, and the government has a quota system where the farmer pays a fee based on the number of cows he plans to milk.
Canada has a similar system, which guarantees the farmer a fixed price for his milk, but his investment per cow limits growth.
“In Wisconsin we need to change our attitude toward larger dairy farm operations,” Bredek said. There are people who see the larger farms as evil polluters, when in reality the larger farms are the only ones that can afford the equipment to control odors and animal waste.
Tinedale Farm in Wrightstown is a good example. It is one of the largest dairy production operations in the state, housing 2,500 animals that produce a total of more than 150,000 pounds of milk per day. The farm has been in the family since 1861. Carl Theunis, who has four sons and a daughter-in-law in the business, views his farm as a total system. Even the manure, 60,000 gallons per day, will be used to generate electricity for the farm.
Theunis and his associates have designed and patented a methane digester being marketed by a separate company they formed called Ag Environmental Solutions, LLC. In addition to generating electricity for the farm, methane digesters control odors and greenhouse gases.
“The payback time on our investment could be five to seven years,” Theunis said. “We’ve got a contract to sell our excess power to Wisconsin Electric in Milwaukee.”
Operated by the family’s fifth generation, Tinedale employs 16 people in the dairy division and 10 in the crop division farming 4,000 acres.
If we don’ produce enough milk in Wisconsin, the cheese plants, milk processors and our entire infrastructure will leave the state,” Theunis said, explaining why he welcomes new farms.
Buelow, part-owner and manager of Wholesome Dairy in Chilton, returned to Wisconsin to start a dairy farm for investors in New Mexico. While living in New Mexico, Buelow, a veterinarian, did consulting work with dairy farms on the nutritional aspects of feeding animals. Within a few years he plans to be milking 3,000 cows. “I know of four families who have opened new dairy farms in Wisconsin,” Buelow said. “Two are from New Mexico, and the other two from California and Texas.”
Buelow said returning to Wisconsin meant a better education for his kids. Other dairymen cite the availability of water without irrigation, and feed availability on location. Every day, a cow drinks a bathtub full of water and eats about 90 pounds of feed. Farms in the Southwest have the expense of hauling feed to their farms. Water is not as plentiful, and now shortages of electricity threaten the large farms that need power to run their milking and refrigeration equipment. In addition, cows have a body temperature of 101ºF, and they like Wisconsin’s cool climate.
It’s the smaller farms that are stuggling. “Just this week two farmers from the Manitowoc area, each with about 40 cows, stopped by to sell their herds,” Buelow said, commenting on the demise of the small dairy farms.
According to Lloyd Holterman, who operates Rosy Lane Holsteins near Watertown with his wife and two partners, the average annual return per cow in Wisconsin is about $600. With 40 cows, a farmer’s annual income is going to be about $24,000, not enough to compensate a family for a 16-hours-a-day, 7-days-a-week, 365-days-a-year job without vacations, health insurance, or a 401k. On the older, small dairy farms, long hours and low pay have driven younger family members into the cities for employment.
After 20 years of working 16-hour-days themselves, Lloyd and Daphne Holterman merged their dairy farms with that of a neighbor. In l997 they started growing at the rate of 100 cows a year. Today, the combined operation farms 950 acres and milks about 580 cows. Lloyd, who has developed international recognition as an expert in genetic selection, has addressed several Eastern European dairy groups on bovine genetics.
As a personal goal, he’d like to see each of his operation’s cows return $1,000 a year. But it’s a tough challenge.
“The dairy farmer is one of the few businesses that buys retail and sells wholesale,” Holterman said, emphasizing some of the vagaries of his business. “We hold inventories of feed for over a year, store manure all winter and carry receivables for 45 days. We won’t know what May’s milk will bring until June 6. It’s all based on a system nobody understands. Our expenses are about 80% of our revenue, 15% of which is spent complying with environmental regulations. We operate on very thin margins, which is why you don’t see Wall Street in agriculture.”
Since combining their efforts with two other dairymen, the Holtermans have improved their lifestyle, working 5-1/2 days a week with time to enjoy the benefits of their labor.
To illustrate the impact of a large dairy farm on a community like Clintonville, Mark Braun at Friendship Valley Dairy quoted some interesting statistics. His 1,750 cows produce enough milk to fill 2.6 trailers every day. The farm employs 23 people, has 1,500 planting acres, generates gross revenue of $7.7 million and has an annual payroll of $1.1 million. Last year it spent $35,000 at a local farm supply store.
Not all young people leave the farms and never come back. With a degree in business, Jim Kusilek worked at a rural branch of Firstar Bank in the commercial loan department. In l998 he and his wife joined her brother to form an LLC called Four Mile Creek Dairy in Barron County. Today, they milk almost 500 cows. With improved feeding, upgrading the herd and the quality of their facilities, they’ve increased milk production by as much as 40% per cow.
“We employ 14 people, a third of them part-time; and we milk six hours a day,” Kusilik said, admitting that his biggest challenge is managing people, not cows.
In the future Kusilik foresees multiple locations and larger herds.
Has there been a resurgence of the dairy industry in Wisconsin? The changes occurring point to fewer but larger dairy operations. Continued mergers and consolidation of farms has attracted younger, better-educated people, who will earn larger incomes and enjoy the improved lifestyle that higher milk production and upscale farming provides.
Aug. 3, 2001 Small Business Times, Milwaukee
