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Small dairy farmers are struggling, big dairy is thriving in Wisconsin

Posted: 10:59 AM, Jun 21, 2022
Updated: 2022-06-21 11:59:08-04

WISCONSIN — Down a country road in Calumet County, Wisconsin you'd never be able to tell by all the open land that this area used to be filled with dairy farms.

"We are one of two farms left in this neighborhood where there used to be probably eighty 40-60 cow herds," Deb Reinhart, the chief financial officer of Gold Star Dairy Farms, said.

It's just open land along quiet country roads.

Reinhart and her husband have managed to keep their roughly 600-cow dairy farm open while all the others closed around them. The farm has been in the family for 112 years.

"This is where our souls live," Reinhart said about the farm, located at N3287 Mill Rd, in New Holstein.

But now, all that is changing. After 47 years of Deb and her husband running the farm and raising their children here, they are selling it. Partially, it's because they are tired and ready to retire after working 365 days a year for almost a half century. They aren't the only ones doing this. According to the non-profit Dairy Farmers of Wisconsin (DFW), the median farmer age in Wisconsin is older than 55. Farm sales and closures are becoming more common as farmers get closer to retirement age. However, that's not the only reason.

Simply put, it's getting prohibitively expensive to operate a farm. Reinhart needs to scale up her operation to make money. But you have to spend money to make money, and many farmers don’t have disposable funds.

Dairy Farm owners
The ownership group of Gold Star Dairy Farm is selling their farm.

"Smaller dairies just don’t have that margin between expenses and income because we don’t have enough animal units to run it," Reinhart said. Their roughly 600-cow dairy farm is considered smaller.

But this isn't new. There have been countless news stories about the struggles dairy farmers are facing in the 21st Century. However, the dairy industry persists. In fact, according the state Department of Workforce Development, Wisconsin has about 25 percent of all dairy farms in the United States and there are about 1.2 million dairy cows in the state. So what does all this mean in regards to the state of the Wisconsin dairy industry? And if these farms are closing, are they just being left abandoned or are people buying this real estate?

Well, the answer is and isn't what you'd expect. The dairy industry as a whole is doing fine, but it's getting more difficult for small farms to survive in this market. As for the physical farms themselves, those usually get bought and used by larger companies. The industry is consolidating. Is that bad?

“Well I don’t think it’s good or bad to be honest with you James. I think it’s how we are evolving," Patrick Geoghegan, the executive vice president of industry relations for Dairy Farmers of Wisconsin, said.

That's how large-scale industries evolve. And Geoghegan isn't the only who is feels indifferent towards this trend. Reinhart echoed the sentiment.

"I don’t know if it’s a crisis. It’s an evolution just like, you know, the mom and pop gas stations are now the Kwik Trips," Reinhart said.

Dairy Farm
According to farmers and experts, the dairy industry as a whole is doing well; however, it's getting tougher for smaller farms to survive.

Dairy in Wisconsin is changing, but the industry isn't failing. It's doing relatively well.

It generates $46 billion a year in Wisconsin. While the number of individually owned dairy farms is down from 180,000 in 1928 to 7,000 today, the number of cows in the state has stayed the same the past 20 years. There are about 1.2 million in the state. Which means that production isn’t going down.

"Farms become more efficient. We have more technology. There's just a - that's a natural occurrence that we’ve seen," Geoghegan said.

Farms are incorporating automated systems into their infrastructure, and farming techniques are becoming more sophisticated. In fact, Reinhart suggests that young farmers looking to get into the industry embrace advancements in farming technology to stay ahead of the curve.

"And the business is only going to continue to evolve. If I were a young person, I'd really look at robots because the labor situation is really difficult," said Reinhart.

Reinhart would like to make those types of capital improvements to her farm, but she doesn't have the cash to do so.

"I can’t do that anymore because we have outstanding debt on (the farm) because of the improvements we made over the years - most recently," she said.

Yes, she has made improvements, but they aren't enough. The farms need better tech, but with rising inflation and growing debt, that isn't possible for a farm of her size.

Large companies can afford to do that, though. They can absorb those types of costs. That's why big farms continue to get bigger while the smaller ones are sold off.

Those farms are bought by one of two groups: neighboring farm co-ops or larger farms.

"Generally (the farm) goes to a neighboring farm who wants to expand. They may have a child or two that want to remain on the farm, so they have to expand, add more cows, and they have to expand their crop land to be able to feed the cows," Geoghegan said.

Sometimes it's a single farm that purchases their neighbors' land and infrastructure, or it's a group of smaller farms pooling their resources together. Included in the sale is the land, infrastructure, and can include the cows. But farms aren't cheap. Gold Star Dairy Farms is selling for $3,575,000. Not everyone can afford to take out a loan of that size. That's where larger farms come into play.

Dairy farm, cow
There are about 1.2 million dairy cows in Wisconsin according to Dairy Farmers of Wisconsin.

“The smaller ones are going out of business and the larger ones are buying them up. When that happens normally the small dairy ends up working for the larger dairy," Ron Brath, of Brath Dairy and Commercial Real Estate, said.

Brath has been helping broker sales of dairy farms for years. He has seen farms sell for $1 million to tens of millions of dollars. The thing about these sales is that the farm is just absorbed into a larger farm. The majority of the farmers will continue working but under new management.

"We’re going to have less farmers no doubt, but the amount of milk produced will always be more," Brath said.

He also mentioned that if a farm is in a decent financial position, they will actually be able to rent out their land and infrastructure. That way the farm stays with the farmer. But that's not a luxury the crew at Gold Star Dairy Farms has. They'd like it to stay in the family or go to their business partner, but that person would need to take out a nearly $4 million loan. That's just not feasible. So they'll sell it.

“It is possible that somebody could come in here and milk these cows. We could leave one day and they could come in the next day. We’ve got a great staff. It’s a working farm," Reinhart said.

But that’s not up to her. All she can do is count down the days left as a farmer and prepare for retirement.

“And so it’s the end of a dream," she said.

A sentiment many farmers in Wisconsin can relate to.

“I miss my babies, you know. I miss them. Yea, we’re going to miss it," Reinhart said as a cow began to lick her hand affectionately.

The future of small farms in Wisconsin is unclear, but the dairy industry will continue to survive in America's Dairyland.

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