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Sharemilking provides a good start into dairy for anyone

Alisa Anderson Raty Published on 18 April 2014

Cattle grazing in a field“We identified three factors that make it difficult for young people to get started in grass-based farming. They take on too much risk, they don’t have enough management capabilities – especially when running a business – and they don’t have enough equity,” says Altfrid Krusenbaum, a dairy farmer from Elkhorn, Wisconsin.

So Krusenbaum and his wife, Sue, designed a sharemilking program on their grass-based organic farm that would solve all three problems for young couples starting out.

“It’s kind of like being employed, except it’s better because you have more of a stake in the farming operation. And yet it’s not quite like being out on your own because you can ask somebody for help. It’s kind of like a stepping stone between working for somebody and going out on your own,” says DeeAnn Bauerle.

DeeAnn and Tom Bauerle started out as partners on their parents’ dairy before moving on to own a small dairy of their own in southern Indiana. They owned 14 acres and rented 20 where they grazed their cattle. Tom worked at a factory to supplement the farm income, while DeeAnn ran the operation by herself.

After a while, they wanted to expand so Tom could work on the farm full-time. But with lack of equity and land availability, they weren’t sure how to do it.

Then they saw an ad for Krusenbaum’s sharemilking program. While they didn’t entirely fit in Krusenbaum’s target group, they thought they could benefit from working as sharemilkers.

The Bauerles had converted to grazing on their dairy and had even been considering converting to organic farming. They felt that Krusenbaum’s sharemilking program would help them learn how to dairy organically and give them a chance to expand without so much risk.

Krusenbaum had discovered sharemilking on a trip to New Zealand in 1995. He had always tried to help young people, so he decided to adapt the New Zealand model to the needs of his farm and to the needs of young people in the U.S. industry.

“A young couple that really wants to start farming but needs to build some equity first may come into our situation, take over most of the chores associated with the livestock, and in return they get a percentage of the milk.

So they get their own milk check from the co-op, and for the same percentage they share in the variable expenses. And more importantly, they get every fifth heifer calf born alive here on the farm and are allowed to raise them on the farm,” Krusenbaum says.

The couple signs a three-year contract with the Krusenbaums. During those three years, Krusenbaum mentors the couple and provides them with educational opportunities in business and grazing. The couple is considered an independent contractor, so they do their paperwork and file their taxes as a separate business.

“It essentially allows them to run their own business within the embrace of our farm. Most of the risk is taken away from them,” Krusenbaum says.

DeeAnn says that their first impression of the Krusenbaums’ farm was that it was a very nice, well-managed farm.

“We really hadn’t been on a lot of other grazing dairies. When we started grazing in southern Indiana, we just kind of did it from reading, so it was interesting to actually be on a farm and look at their grass and their lanes and how they set up their water systems. It’s very well-managed,” she says.

So the Bauerles signed the contract, started sharemilking and sold their farm in Indiana.

For anyone who is brand-new to business, the opportunity for step-by-step help with paperwork would be helpful. And although they had been dairying already, DeeAnn still found Krusenbaum’s mentoring useful.

“I had never hired anyone. The way we set it up, I was the owner and Tom was my employee, and we hired a part-time person to help in the spring, and Altfrid helped me with the paperwork getting them hired. And they want you to do the taxes electronically every month, and he was there to show you how to do that,” DeeAnn says.

Learning how to budget for lean times was another invaluable lesson.

cattle smiling for the camera “In the winter months, you have to buy feed. So you have to learn how to save money in the summer months when you’re not having as many expenses and save them for the lean months in the winter. Also, in the winter months Altfrid wasn’t milking as many cows, so the milk check was lower. So you kind of have to learn to budget your cash flow,” DeeAnn says.

The experience helped the Bauerles recognize some mistakes in grazing they’d been doing on their previous operation – such as using grazing pastures that were too large.

“We learned to put in a temporary fence, and you would cut it into feedings so they only get enough for a few hours at a time.

It helps them use all the grass better instead of going in the first feeding and eating all the really yummy stuff, then the second feeding they’ll eat the so-so, and then the third feeding they’ll eat the bad stuff, and then they don’t milk as well.

If you can put out exactly as much as they’re going to eat before the next milking, it seems to make production more stable,” DeeAnn says.

DeeAnn and Tom also grew to enjoy organic dairy farming. DeeAnn particularly appreciated how healthy the cows were and the focus on good health from the soil to the consumer.

Last February, DeeAnn and Tom moved off the Krusenbaums’ farm and are working to start up their own operation again. Their goal is to buy a 200-acre farm and build their herd up to 80 cows.

Because of the sharemilking program, starting a dairy again should be much easier for the Bauerles.

“If they apply for a loan, they can show that they ran their own profitable business, and hopefully they take some savings with them in the form of cash and some equity with them in the form of cattle,” Krusenbaum says.

The banker that reviewed the Bauerles’ business plan for their loan application had been impressed, DeeAnn says, because they had real numbers from a real operation.

“The financial experience was good, and we got some calves while we were sharemilking, and those look good on our balance sheet,” she says.

Krusenbaum expressed frustration that more young people haven’t been interested in sharemilking, particularly those who are serious about getting into dairying.

“There are so many people who want to start dairy farming, increasingly coming from a non-farm background that I feel would really benefit from this. But if they get to the point where they have a couple years of experience, they always think they can do it right from the start.

I see them struggling so hard. There are so many that call me and ask for advice, and it’s all hindsight. Even if it’s just an FSA loan, it’s a huge burden for a farmer that didn’t have any equity to start with,” Krusenbaum says. PD

Alisa Anderson Raty is a freelance writer based in Rexburg, Idaho.

Photos courtesy of DeeAnn Bauerle.

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