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New Zealand-Style “Sharemilking” May Ease Dairy Farm Transitions In Wisconsin

Wisconsin, historically a leading state in apprenticeship training, may look to New Zealand to help revitalize dairy farming as a career, according to a researcher at the University of Wisconsin-Madison Center for Integrated Agricultural Systems.

“Historically, labor unions were strong and apprenticeships were common around industry unions,” says Steve Stevenson, who studied dairy farmer career paths in New Zealand and Wisconsin. “Career training, apprenticeships, and journeymen have never been tied to agriculture in Wisconsin. All of these pathways have been within farm families,” he said. New Zealand has created a formal career pathway for new farmers.

The Center for Integrated Agricultural Systems and several organizations in the College of Agricultural and Life Sciences have formed the Farm Entry and Exit Coalition to help Wisconsin farmers develop dairy career paths.

Wisconsin dairy farm numbers have been decreasing as more people leave the industry than enter it. This causes problems for retiring farmers who can”t sell their farms for what they expected. Part of the problem is that new farmers usually come from farm families. Family size has decreased and farming is not the attractive career choice it once was.

“In New Zealand 30 percent of new dairy farmers come from non-farm backgrounds. This figure is 5 percent in Wisconsin,” said Stevenson.

New Zealand has a grass-based dairy farming system, which is a smart system for them in terms of profitability and “enter-ability” for young farmers, Stevenson said. The National Dairy Board, farmers, and the ministry of education in New Zealand have formed a partnership to train new dairy farmers.

“Dairy workers are getting a lot of attention. The trainers aren”t talking just about the functional skills,” said Stevenson. “They are also talking about values, such as how one develops leadership skills.”

Early career training is the first step in a well established ladder of dairy career development in New Zealand. The first steps include classroom training, internships and a two- to three-year apprenticeship as a hired laborer on an established dairy farm.

At mid-career the farmer begins sharemilking to build equity for future farm ownership. “This is when the farmer moves from skill development to equity development. As long as you stay a hired laborer your equity development is limited,” Stevenson said.

In a sharemilking arrangement, a skilled farm manager and a land-owning farmer develop a partnership for shares of the milk check. The first sharemilking arrangement is usually a 30-70 split for the sharemilker and the landowner, respectively. Some of the sharemilker”s pay may also include heifer calves, Stevenson said.

After sharemilkers build their own herds, they may then move to a 50-50 split of the milk check, and the land owner semi-retires. “This is a powerful system socially and economically,” said Stevenson. “It is a synergistic system. The same mechanism that allows farmers to enter farming, allows farmers to exit.”

In the 50-50 arrangement sharemilkers usually build their herds to 600 to 800 cows. “These have to be fairly large farms in order to support two families,” said Stevenson. The farms are also different than Wisconsin”s. New Zealand farms use intensive pasture systems and high-intensity milking parlors, making them labor-efficient as well as capital-efficient, said Stevenson.

After building his herd, the sharemilker goes to the bank and cashes in a fair number of cows, usually 400 to 500, and buys a smaller, starter farm. The sharemilker then owns about 150 cows.

In Wisconsin, older farmers who want to get out of dairy farming sometimes find that the farm they want to sell is not attractive to younger farmers. Many of these farms are very capital-intensive to buy and maintain, said Stevenson.

“Sharemilking may lower the gap between what farmers think they should get for the farm and what a young farm family would like to pay for an economically-viable dairy farm,” he said.

In New Zealand, dairy farmers usually do not buy the farm on which they sharemilked. This may be different in Wisconsin. “Farmers may be able to receive less up front for the farm, retrofit the buildings and structures, and work out a buy-out plan,” said Stevenson.

The Wisconsin Farm Entry and Exit Coalition is talking with farmers, lenders and extension agents about dairy career options. “Nobody is kidding themselves about the challenges the current situation presents,” said Stevenson.

Challenges include changing attitudes about what constitutes a profitable dairy system and developing models for early dairy career training and sharemilking in the state. A pilot training course called the Wisconsin School for Beginning Dairy Farmers is currently being evaluated as part of the Farm and Industry Short Course at the UW-Madison.

It is also important to allow enough time for a transition from sharemilking to farm ownership. “Five to eight years is the transition time sharemilkers would need,” said Stevenson. “This means working with 45- to 55-year-old farmers that are beginning to think about their own retirement.”

Stevenson”s study was supported by the Babcock Institute, a collaborative effort by the UW-Madison Department of Dairy Science, the School of Veterinary Medicine, and the University of Wisconsin-Extension. The Babcock Institute provides information exchange between the Wisconsin dairy industry and dairy producers worldwide.