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1108 PD: Minnesota producers partner to expand

Published on 24 July 2008

Maurie and Rita Young, owners of Emerald Spring Dairy in Plainview, Minnesota, saw an opportunity in November 2005 to expand their 500-cow operation. Heijwood Dairy, a neighboring farm located directly across the highway from their farm, went up for sale. Although the Youngs believed purchasing the farm would be advantageous, they also knew it would tighten their equity position and decided it was more of a “squeeze” than they were comfortable with taking.

Unwilling to let the opportunity get away, Maurie and Rita began to look for a partner who could help them purchase the dairy.

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Working out the details
The Youngs decided to contact John and Connie Meyer, a couple from their dairy peer group. The Meyers own Quarry Hill Dairy, a 500-cow operation in Rollingstone, Minnesota. The Youngs knew the Meyers were also looking for a way to increase their herd size, and the Meyers shared the Youngs’ “positive outlook and enthusiasm for the dairy industry.” After considering the offer, the Meyers agreed to the partnership.

The two couples began working with a business consultant with AgStar Financial Services, headquartered in Mankato, Minnesota. The consultant helped the partners to complete a compatibility study that identified similarities and differences in personalities and management styles. The Youngs say this process assured them that they and the Meyers could work well together. The consultant also gave advice on specific terms to include in the partnership agreement.

An attorney was hired to draw up a purchase agreement and partnership documents. The couples also worked with financial consultants to create a budget and expansion scenarios for the new dairy farm. In February 2006, Whitewater Dairy incorporated.

“Everything is split 50-50,” Maurie says. “I talk to [John] at least once a day. I manage the day-to-day decisions, but anything major, I run by him.”

In addition to these daily conversations, Maurie and John agreed to have annual budgeting meetings as well as quarterly reviews of the shared operation’s accounting and financial measures.

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Rita, who handles the accounting and payroll duties, recommends that for producers in similar partnership agreements, all parties involved should have everything spelled out clearly.

Improving Whitewater
Once the purchase was finalized, the partners were able to focus specifically on improving Whitewater Dairy LLC. Although the operation came with a fairly new parlor, only 10 years old, the Youngs and Meyers faced some challenges from the beginning.

“The herd was undersized for the size of the parlor,” Maurie says. “And let’s just say, cow comfort was less than ideal.” After the purchase of the dairy, the freestall barn was expanded from 300 stalls to 450. The bedding was converted from mattresses to sand to improve cow comfort, which Maurie says was the “main objective from day one.”

With the addition of the sand came a new challenge – nutrient management.

“The lagoon was designed for a mattress bedding system,” Maurie says. “So we needed to figure out something else.”

In order to manage the sand bedding, a sand-settling lane and a flush-flume system were installed. This system allows the sand to be dried and then reused, cutting down on bedding costs. These improvements have made a big difference in somatic cell count, reproduction, pregnancy rate and milk production.

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“We went from averaging 60 pounds to 90 pounds,” Maurie says. “Before the sand, cows were standing a lot of the time. Sand bedding greatly improved the time the cows lie in the stalls.”

Divide and conquer
Maurie contributes much of Whitewater Dairy’s success to him being able to focus solely on the dairy herd as the young stock are raised elsewhere. The bulls born at Whitewater Dairy are sold within the week they are born, and three custom growers raise the heifers from the time they are four-day-old calves until they are springers.

Maurie says “virtually no cropland” came with Whitewater Dairy, so the feed is mixed at Emerald Spring and delivered to Whitewater daily. He explains that Emerald Spring grows or purchases all of the forages and other feed commodities for both operations and invoices Whitewater Dairy for feed delivered.

Maurie is also able to share his workload with a reliable staff of eight full-time employees at Whitewater Dairy and 13 workers at Emerald Spring Dairy.

The herdsman at Whitewater is Hispanic and speaks fluent English, making him an essential member of the staff. Maurie’s son Darrin returned to the farm about six months ago and now manages the herd at Emerald Spring. Maurie says these herdsmen are able to do a major share of the veterinarian work themselves. He also has a full-time mechanic, two employees responsible for feed rations and inventories and one worker who specializes in nutrient management and application.

Maurie considers himself “a jack of all trades,” filling in whenever necessary and handling the majority of the decision-making. He sees the need for more structure and would like to have more specific job responsibilities and guidelines as well as more frequent employee meetings. For the time being, however, “everything is still evolving,” he says.

Similar to other producers, sharing responsibilities and managing personnel has and continues to be a difficult transition for Maurie. He remembers a time when he was milking 45 cows in a tie-stall barn. Now, he is responsible for more than 1,000 animals.

“It’s challenging to go from controlling everything yourself to managing people,” says Maurie. “You’re a little more flexible but in a different way.”

Neighborly relations
Even though running two operations can be taxing, Maurie and Rita take the time to thank their employees, neighbors and industry representatives.

“We had an Appreciation Day last August,” says Rita. “We wanted to get people together to celebrate our industry, and we wanted to say ‘thank you’ to everyone who helps us out on a day-to-day basis.”

More than 200 people attended the Youngs’ open house, and although they don’t plan to make it an annual event, Maurie and Rita would like to continue recognizing their supporters throughout the year.

Emerald Spring Dairy has been honored with the Five Star Dairy Environmental Quality Assurance Award, sponsored by the Minnesota Milk Producers Association. The award requires producers to practice a good neighbor policy, to plant trees for wildlife, to manage odor and to maintain and enhance water quality. The Youngs and the Meyers have put in an application for Whitewater Dairy, as well.

Although the Youngs haven’t faced opposition from anti-agriculture groups while they were expanding, they are prepared to answer questions and promote their way of life.

“We would want to educate opposition groups and reassure them we’re preserving the land for future generations,” says Rita. “We’d be glad to show what we do, why we do it and how we follow the guidelines.”

Many anti-agriculture groups might consider Emerald Spring and Whitewater Dairy “factory farms,” but the Youngs have a different point of view.

“We don’t think size dictates whether it’s a family or a factory farm,” says Rita. “We consider this a family farm, and we operate it as a family.”

Just like they did for Darrin, Maurie and Rita would like to keep the option open for their three other sons to be active with the farm. Maurie’s advice to his sons might be applicable to just about every dairy producer today.

“[Dairying] is a good way of life, but you still have to treat it as a business,” Maurie says. PD

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