Successful Farming
May-June 2005
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Beginners build a herd
Dan and Muriel French help beginners get a foot in the dairy door

By Raylene Nickel

Getting a start in the dairy business is no easy task. Lenders are likely to turn a deaf ear to beginning farmers who have little collateral and are looking for loans to buy cattle, equipment, and land all at once.

But dairy producers Dan and Muriel French, who run a 155-cow dairy farm near Mantorville, Minnesota, have found a way to help beginners get a foot in the door. At the same time, they staff their own dairy with trustworthy helpers. The unique employment arrangement lets beginning dairy farmers build a dairy herd of their own while working for the Frenches.

"We'd like them to be able to leave here and go out on their own with their cows paid for and with cash in hand," says Dan. "We benefit by getting a high calibre of help we couldn't get any other way. Finding really good help pays dividends, and the very best employees are those who want to get started dairying on their own."
The Frenches first tested this unique arrangement on their son, Jason. He left home in 1994 owning 35 cows free and clear. "Using these as collateral, I was able to borrow enough money to buy 50 more cows," he says. "In addition, I had saved enough money [by working for his parents as well as at another job for four years] to make a down payment on a farm."

Jason and his wife, Edee, who runs a dog-grooming business, are purchasing their 145-acre farm on a contract for deed. They now sell organic milk from a grass-based herd of 55 head.

After Jason found his own place, his friend, Phil Brossard, then 24, went to work for the Frenches. He had his own dairy in sight, and experience had shown him that working with the Frenches could be the best way to breathe life into that dream.

Phil, who grew up on a dairy farm, had already tried to borrow money to buy a farm and a herd of cows. "But lenders practically laughed at me," he says. "I have always loved working with cows, and I wanted to teach my children the family values I myself learned from growing up on a dairy farm. Working with Dan was the only way I could get started."

After three years, Phil and his wife, Dawn, leased a 120-acre farm near Nerstrand, Minnesota. They left the Frenches with 22 dairy cows. By using these as collateral, the couple got a loan to buy another 40 head.

With just two years left on their 10-year farm lease, the Brossards hope to soon find and buy a dairy farm of their own. "All that we've done so far is a stepping-stone process to keep our debt load manageable," says Phil. "The only way to make it in farming is to have as little debt as possible."

Third protege
Dan met Jon Kaiser, his third protege, while mentoring the Farm Beginnings Program offered by Minnesota’s Land Stewardship Project (see sidebar). After completing the program as a student, Jon came to work with the Frenches to gain more experience and to continue building a herd of his own.

Then 30 years old, Jon had worked at a couple of dairies before. Today, Jon continues to work for the Frenches and owns 38 Jersey-Holstein cows. When the timing seems right, he and and his wife, Mindy, will look for a farm of their own.
Dan's financial agreement with Jon is set up so that he earns a share of the milk check equivalent to the percentage of the herd comprised of his cows. Jon also pays an equivalent percentage of the grain costs, as well as his share of veterinary costs. The Frenches provide a home, and the Kaisers pay the utilities. This setup simplifies bookkeeping, says Dan, because Jon is essentially self-employed.

Phil, who had a similar arrangement with the Frenches, says, "Financially, it was as close as possible to actually being out on your own."

Buy their own cows
The beginning dairy farmers are responsible for arranging the financing -- or saving enough money -- to buy their own cows. In the past, they were able to bring cows with them. But the Frenches now maintain a closed herd and require that a beginning producer purchase a start-up herd from them.

A beginner can continue to build a herd by buying more cows from the Frenches as well as retaining heifers. The arrangement makes it possible for beginners to bear the financial burden of starting up an operation. They can handle the investment in a cow herd because they don't have the overhead costs of facilities and equipment.

And the cows the young farmers own make it easier for them to get a start-up loan when they head out on their own. "A beginning farmer's loan request is much more palatable to a banker when the young farmer has 30 cows that are paid for," says French.

Besides being exposed to the financial aspects of dairying, the young producers who work with Dan also learn more about grass-based dairying and alternative marketing methods. He is one of a handful of Minnesota dairy producers involved in PastureLand Cooperative, which processes and markets cheese from cows eating primarily pasture forages.

His cows graze seven to eight months out of the year, eating a grass mix of 30% to 40% legumes. They are each fed only about 6 pounds of grain a day. On just 350 acres Dan grows all the summer grazing and most of the winter forages for 155 cows.

"Switching to grass-based dairying has let us cut our equipment costs to a third of what they once were," he says.

These lessons aren't lost on the young farmers. Phil says the grass-based feeding and management methods he learned from Dan save him $200 to $300 per cow in annual feed costs. Phil uses the leased farm for summer and fall grazing. To feed his cows over winter, he buys baled hay and standing corn to chop for silage.

Best approach
"The approach my dad takes is the best start-up alternative I see for young producers," says Jason French. But it's not easy, he adds. It demands commitment and understanding from everyone. The young producers Dan values for their responsible work habits have a strong drive to work for themselves. Yet during their time with Dan they must work as employees.

"It's a good system overall, but it's not without friction," says Jason. "Young producers in these working relationships have to keep their eyes on the big picture, keep focusing on the dream of getting out on their own."

For Dan's part, his hope for each young farmer and his vision for rural communities is what pulls him through times of potential conflict.

"Muriel and I believe in trying to keep farmers on the land," he says. "In spite of the fact that we lose excellent help each time a young producer leaves our farm, we just keep challenging and encouraging them to get out on their own.

"As a farming culture we've got to create viable paradigms for young people to enter agriculture."

Looking back, Jason can't imagine beginning dairying without the help he got from his father.

"Every day for the first four years, I questioned whether I was going to make it," he recalls. "Even though I came into my own operation with so much financial momentum from having worked with my father, it was still extremely difficult to get started.

"I can't imagine trying to start from scratch," says Jason. "That's why what my father does for young dairy farmers helps so much."

The leg up Jason got from his dad, the low-cost methods of grass-based management, and a stout premium for organic milk paint a bright future for his farm and family.

"I'm pretty optimistic about dairying right now," he says.


SIDEBAR: Land Stewardship Project
The Farm Beginnings Program offered by Minnesota's Land Stewardship Project (LSP) offers a 10-month course for people hoping to start farming. Topics include goal setting, financial planning, and marketing. Students range in age from 19 to 65. Some have no ag experience; others come from farms.

Following the course is a mentorship program in which established farmers share their experiences relating to marketing methods or low-cost production practices.
Participants can apply for a zero-interest livestock loan funded by a grant to LSP from Heifer Project International (HPI), a charitable group. The loan can be used to buy dairy or beef cattle, swine, poultry, goats, or sheep. Recipients repay the loan with live animals.

Dairy producers buying 15 bred heifers, for instance, would return five bred heifers to HPI the third, fourth, and fifth years after the purchase. The HPI cattle help build recipients' equity bases, increasing their chances of getting livestock loans from conventional lenders.

Other states are starting to copy the Minnesota program, says Karen Stettler, program coordinator.

For more information, call Stettler at 507/523-3366 or e-mail stettler@landstewardshipproject.org.

For more information about Heifer Project International, call toll free 800/422- 0474 or visit www.heifer.org.

Learn more:
Dan and Muriel French
56330 State Highway 57
Dodge Center, MN 55927
Phone: 507/635-5619
E-mail: dcfrench@aol.com

Jason and Edee French
19502 County Road 24
West Concord, MN 55985
Phone: 507/527-2386

Phil and Dawn Brossard
10366 East 170th Street
Nerstrand, MN 55053
Phone: 507/333-2366

Jon and Mindy Kaiser
56536 State Highway 57
Dodge Center, MN 55927
Phone: 507/635-5985

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