Ready for the Next Step (part 1)
Jon Kaiser is less than a year away from paying off his Farm Beginnings livestock loan. He smiles when he says this, because it means he’s just a little bit closer to making farming more than just a fantasy.
“I’m surprised I’ve come this far,” says the 35-year-old while sitting at his kitchen table, his growing cowherd grazing a nearby pasture.
Kaiser grew up in Albert Lea, Minn., just north of the Iowa border, and got the farming bug as a teenager while pulling weeds out of soybeans on a local farm. That same farm produced hogs, and Kaiser learned early on he liked working around livestock. After graduating from high school in 1987, he studied agriculture in college and worked on various farms, including a dairy operation.
But he didn’t see any way of getting started in farming on his own with limited financial resources. He liked raising hogs but this was the early 1990s, the beginning of an era—which has yet to end— when farmers were being told the only way to produce pork was to invest in expensive confinement facilities and sign exclusive packer contracts.
One day, while working on a hog farm, Kaiser read an article about a farmer in Michigan who was producing milk using a system called managed rotational grazing. The system can be set up and operated at a fraction of the cost of conventional dairying, and the farmer was making a good profit, according to the article.
“That was what clicked for me,” Kaiser recalls. “It seemed the way to get started from the ground floor with nothing was through grazing. I also became convinced that cows belong outside; it’s the way nature intended.”
In 1998, Kaiser enrolled in the Land Stewardship Project’s Farm Beginnings course. Through the class, Jon learned about financial planning and goal setting. At the time, the course was focused mostly on dairy grazing, and Kaiser met several other beginning farmers who were interested in starting from scratch using grass, good animal husbandry and sound business strategies. Even more importantly, he met established farmers from the area who were proving that grass farming was a viable alternative.
Two of these farmers were Dan and Muriel French, veteran graziers in southeast Minnesota’s Dodge County. In 1999, Kaiser began share-milking with the Frenchs. Through this arrangement, Kaiser owns 20 percent of the 165-cow herd and gets 20 percent of the milk check. The young farmer pays for 20 percent of the grain fed to the cows, and covers the veterinary bill for his particular animals. The pasture, forage and machinery are provided, as well as housing for Kaiser, his wife Mindy, and their 4-year-old son, Nicholas.
In 2000, Kaiser was one of the first Farm Beginnings graduates to receive a no-interest livestock loan. The program, which was made possible by Heifer International, gives recipients five years to pay off the loan; during the first two years, no payments have to be made. Kaiser got 15 cows through the program, and bought 10 with his own money. Getting the Heifer International loan helped smooth the way for a bank loan, which made it possible to buy eight more cows. With the addition of calves his cows have produced, that brings Kaiser’s milking herd up to 37 cows.
Kaiser says the share-milking arrangement has been a good post-graduate experience for him after Farm Beginnings. He’s gotten to manage a grazing operation, while being given the responsibility of handling his share of the finances. In addition, the French farm is a member of PastureLand Cooperative, a group of southeast Minnesota grazing operations that market grass-based cheese and butter. That means Kaiser has seen firsthand how a dairy farm can add value to its production. He also belongs to a network of graziers from the area who meet on each other’s farms regularly to discuss management strategies.
“Before Farm Beginnings I didn’t have anyone I could just call up or go to for questions,” says Kaiser. “Now I have a number of people I can call on.”
That network may prove invaluable as Kaiser works to push the fantasy part of farming even further aside. The share-milking arrangement has been great, says Kaiser, but he and his wife are looking for a permanent home for their cowherd. Mindy works at a hospital in Rochester, so the couple would like to stay in the area. They are willing to consider various possibilities, including buying an acreage and renting the grazing land.
“Just going out and buying a farm, that’s not an attainable goal for me right now. But I would like to take the next step of being on my own,” says Kaiser as he slips on his work clothes and heads out the door. “I’m getting anxious to take that next step.”
A Confidence Builder (part 2)
Hakon and Karen Torjesen are at that point in their lives where they’d like to do less of the daily management required to run a farm. He just turned 80 and she’s in her early 70s, and they are quite active with a nonprofit organization that provides training to pediatric doctors overseas. All four of their adult children have their own careers. So a few years ago they went looking for a younger person to farm some of their 260 acres.
One easy option was to simply rent it out to a large crop operation — their land lies in a part of southeast Minnesota’s Goodhue County where prime corn and soybean acres are going for record high cash rents. But the couple didn’t want to turn over their land’s care to just anyone —it’s been certified organic since 2002 and they wanted it to remain that way.
And there was an added wrinkle: the Torjesens have raised corn, soybeans and oats on the land, but since becoming organic it’s bothered them that there wasn’t livestock on the property to cycle organic matter back into the soil (livestock had not been on the farm since the Torjesens bought it in 1991).
“It closes the loop to have livestock,” says Hakon. “It makes the farm complete.”
It turns out the Torjesens’ search for a more sustainable way to be organic has provided a key opportunity for Jon and Mindy Kaiser. The Kaisers are beginning farmers who are hitting agriculture’s version of the glass ceiling in the form of lack of access to land. How the Torjesens and the Kaisers are working together to mutual benefit offers insights into how an older generation of landowners can provide a leg-up to beginning farmers while ensuring that the stewardship legacy they’ve built on their property is preserved and strengthened.
Bringing Dairy Back
When the Torjesens started looking at bringing livestock onto the farm, milk cows immediately came to mind. Karen grew up on a dairy farm, and both she and Hakon liked the idea of seeing the classic red barn utilized on the property.
They knew from talking to other organic farmers in the area that it was tough for young organic producers to find access to land, what with high land prices and landowners leery of renting to someone who’s doing things a little out of the mainstream. So they put the word out that they needed an organic livestock farmer. It was good timing for the Kaisers. For eight years they had been building an organic dairy herd on the farm of Dan and Muriel French in nearby Dodge County.
Jon did not grow up on a farm, but in 1998-1999 he took the Land Stewardship Project’s Farm Beginnings course. After graduation, he started share-milking with the French family, and through that, as well as with the help of an interest-free livestock loan he obtained through Farm Beginnings, was able to develop an organic herd of 40 cows. Working with the Frenches was good experience—Kaiser learned the basics of grass-based dairying, as well as how to market milk through the PastureLand butter and cheese co-op the Frenchs belong to. But it was time for his family to take that next step and grow the herd to the point where they could afford to buy their own farm.
The Torjesens heard about the Kaisers through the informal organic farming network in the area and began discussing the possibility of them bringing their herd onto the farm. Hakon and Karen were very methodical in dealing with the Kaisers, asking for references and putting Jon through an interview process.
“It was like a job interview,” recalls Jon.
He applied for and received two USDA Farm Service Agency (FSA) loans—an operating loan and one to buy livestock and machinery. After his business plan was reviewed by the FSA, a loan officer from the agency conducted a face-to-face interview with Jon. Hakon sat in on that discussion and got a sense of how thorough the young farmer’s business plan was.
“Saying you want to farm isn’t enough,” says Jon. “I’ve talked to other people who want to farm who don’t have a good business plan to make it cash flow. I learned how to do a good business plan through Farm Beginnings.”
In 2006, the Kaisers and Torjesens agreed to a three-year cash lease on the farm, much of which is considered prime cropland. They set the base price of the lease based on the approximate average rental rates in the area at that time and built in a moderate annual increase: the rate was $150 in 2007, is $160 this year and will be $170 in 2009. In light of what has happened to land prices and rental rates just within the past several months, putting a yearly ceiling on the lease rate has turned out to be a considerable financial break for the Kaisers.
“Since we set that price, the rents have gone wild. That was not a great donation on our part, that was just dumb business,” Hakon says with a laugh. “We told Jon once he gets his feet under him, he will owe us one.”
The Torjesens have done more than charge a reasonable rental rate. They agreed to help the Kaisers upgrade the farm so that cows could be milked and grazed on it. They considered building a new milking parlor, but instead opted to refurbish the old stanchion barn. The landowners agreed to pay for improving the structure of the building itself, while the Kaisers purchased used milking equipment to re-tool the parlor.
“We wanted to keep Jon’s risk low and our capital investment low,” says Hakon of the decision not to build a new parlor.
The Kaisers rely on rotationally grazed pastures to produce organic milk, so the Torjesens applied for a USDA Environmental Quality Incentives (EQIP) Program grant to install fencing on roughly 76 acres. The approximately $10,000 in EQIP money covered half the cost of the fencing, and the Kaisers and the Torjesens split the balance. The Kaiser family —Mindy and Jon have three children—is also being provided housing on the farm. They live in the farm’s original homestead, while the Torjesens live a half-mile away in a house they built on the other end of the farm when they bought it.
Today, the Kaiser dairy herd has grown to 45 cows. Jon and Mindy are renting 120 tillable acres in total. Besides grazing the land, they are also raising hay, barley and peas for feed. Jon says renting this farm has been a critical step for him as he heads toward his ultimate goal: building his herd to 90 cows and buying his own farm. The lease will run out in 2009, and Jon’s not sure what will happen after that.
Both he and Mindy are 39, and they are getting anxious to get their own place as their 40th birthdays lurk around the corner. She works at the Mayo Clinic south of the farm in Rochester, Minn., and the couple would like to stay in the area, but Jon says they will need to stay flexible and be ready to move if the right opportunity comes up for buying a farm.
For the young farmer, already one side benefit of this experience has been the morale boost it’s provided to have a landowner not only take him on as a renter, but to fork over money to help get the enterprise on its feet. While searching for farms to rent or buy, Kaiser has found that many conventional farmers don’t feel a beginning farmer can make a go of it.
“When looking for a farm, I was told I couldn’t make a living,” he says. “People don’t want to take that risk on a young farmer. I feel with my business plan I’ve been able to show that it does cash flow.”
The Torjesens are happy they took the extra trouble to get young dairy producers onto the farm. They feel the land is benefiting, and the remaining acres they are now farming themselves is much more manageable.
Hakon says once the lease is up in 2009, “all options are open,” including renewing the lease or possibly selling part of the farm to the Kaisers.
“We’ll just take one step at a time,” says Hakon. “They have turned out to be wonderful renters. They have been absolutely on time with every payment, but we know times are tough. It’s not guaranteed they’ll make it, but I guess it does feel good to help out a beginning farmer. So far it’s been a viable proposition for both of us. It worked for them and it worked for us.”