Thursday, January 5, 2012

Other Ways to Sell Grass, Part 1

Winter is when I have a bit of extra time to do some reading and I tend to spend quite a bit of my free time reading and thinking. I am especially intrigued by ideas that are a bit outside the conventional box but which seem to make considerable sense even though they may not be widespread in terms of their adoption. I read with interest an article on the front page of Stockman Grassfarmer magazine this month on the New Zealand concept of grazing dairies and sharemilking. It seems as though some of those from the island down under have relocated to the central and southeastern US and they have brought their concepts with them. It is certainly an idea which I think could be made viable in slightly modified form here in the mid-south.

Most of the land in this part of the world isn't really suitable for anything other than grazing and yet most of the dairies built here are modelled after large confinement operations in the midwest where climate and soil conditions are very different. Although there are some excellent dairies based on this model this has never made much sense to me because it negates the biggest cost of production advantage we have; we don't need the infrastructure or housing found further north because of our ability to grow forage more-or-less year round.

We are able to take full advantage of this with our horse boarding operation and with the beef cows. I've wondered for a long time whether or not we should try to exploit our climatic advantages further with the addition of a small, seasonal dairy that mostly relies on grazing with the possible addition of small amounts of grain and protein in early lactation which is when they need it most.

Sharemilking is something I have no experience with at all except that I've talked with some families who have done it or are currently doing it, but the concept sounds at least somewhat interesting from a ROI and ROE perspective. It's hard (and extremely expensive) to start a dairy and make a living while floating the full cost of the land, cows and other infrastructure when one is starting from zero. This concept is one of several that allow a tenant/sharemilker to build equity in his/her cows first and once the herd was paid for he/she could then move forward with buying land if that was what he or she desired. As I understand it the tenant owns the cows and provides most of the labour while the landowner (obviously) owns the land and milking facilities. The milk cheque is split depending on who does what with the idea that all parties will have some inducement to make things better.

Both concepts made for interesting reading and thinking, that's for sure. Whether or not I ever choose to do anything more than think about it, this is the sort of stuff that keeps my mind occupied and (mostly) keeps me out of trouble during the colder months.


Bif said...

Great. Another reason I should move South!

Jack said...

The share milking system in New Zealand is rather unique and I think it works in large part becasue of the structure of the NZ dairy industry with Fonterra being the principal processor and organized as a farmer cooperative.
there have been a few attempts to try and set up a sharemilker arrangement both in Canada and in the USA but the structure of the dairy industry in our respective contries just does not lend itself as well to the system.
Dave Forgey in Indianna has setup at least one sharemilker agreement but from what I read it had its challenges.

Jason said...

There are a few large sharemilking setups in the Missouri Ozarks and Bootheel and a few more in Souteast Georgia that I'm aware of and they seem to work. That said you are exactly right in that all the participants that I'm aware of are from NZ and western Europe where that sort of thinking is a lot more common than it is here.

Bif said...

I need more ways to sell grass!!

Or, whatever topic you choose. No pressure.

Jason said...

Your wish is my command. :)