The Evolution of a Dairy Farming Business Plan
Learn How to Start Dairy Farming Using Holistic Management Practices
By Heather Smith Thomas, Photos courtesy of Alan Yegerlehner – The small family dairy farm in Indiana run by Alan Yegerlehner produces grass-fed milk products, marketed from their pasture dairy. This has been their dairy farming business plan for generations. For Yegerlehner, who grew up in Clay City, a small agricultural community in Indiana, his dairy farm encompasses the original 104 acres where he grew up, and where his great-great grandfather emigrated from Switzerland in 1860.
“Each generation has managed the farm in one way or another. My father came back to the farm after serving in World War II and went to Purdue,” says Alan. “After high school, I went to Purdue University for four years. I dragged my feet a bit, but my parents wanted me to go, so I did.”
After World War II, Alan witnessed the rapid changes in farming.
“I was at Purdue during the Earl Butz era in the 1970s when things were rapidly changing in agriculture,” he explained.
Modern technology and new practices aimed at increasing production were evolving during those years and dairy farming business plans were being adjusted to match the trend.
“This is what the colleges were preaching, so I accepted it and got swept up in the idea that dairy farmers needed to expand, increase production, leverage money—borrow all you can and grow big. Down deep inside me, I knew some of these things weren’t right, but I went into partnership with my father and we borrowed more money to expand. We accumulated quite a bit of debt, and our debt to asset ratio wasn’t the best,” Alan said.
He and his wife Mary were married in 1974. Alan graduated from Purdue in 1976, and they lived on the dairy farm.
“I’ve never had any other job. I grew up farming and kept at it a little while I was at school. When we came back full-time, Mary and I purchased my grandfather’s 80-acre farm, which is next to the original 104 acres and this is where we’ve been ever since,” he says.
“During those early years I was very interested in organic and direct marketing, but at that time no one was really doing that here in Indiana. If you mentioned these things you were labeled as a weird person!”
An Evolutionary Change to Yegerlehner’s Dairy Farming Business Plan
One day, he received a publication from New Farm magazine.
“I was amazed by the fact some people were actually doing this [organic dairy farming] and making a living at it. The next few years we tried to make some changes. I went to a couple of seminars that Rodale put on. I found another farmer nearby who was interested in the same thing. We compared notes and supported each other emotionally. We knew we weren’t completely alone,” Alan says.
“We started out with some changes in our cropping because that was where my biggest interest was. Our farm had crops and a dairy. My dad and mom started the dairy in 1950. We’ve had milk cows on the farm since that time. I was interested in both the dairy and crops, but maybe a little more interested in crops.”
As they made changes, they started to do some of the rotations a little more intensively, with more wheat, and adding more clover and legumes in the pasture ground they rented.
“We borrowed more money and put up some blue Harvestore silos. Our barn burned in 1973, so we put up a new block building and herringbone milking parlor, so we had a lot of debt,” he said.
“I started making changes in the cropping and tried rich tillage, trying to build soils using green manure and limited tillage. We were able to quit using herbicides, doing some experiments with rotary hoeing,” Alan said.
“We were having a good time with that, and doing some things that didn’t make us so dependent on the chemicals and commercial fertilizer. We went through the 1980s and early 1990s doing that, and we were actually growing nearly all our own feed for the dairy, using haylage, corn silage, and corn. We felt we were doing a good job managing what we had, but in the early 1990s, I realized that even though we were making all this progress with the crop farming we were not doing very much with the marketing side. We weren’t getting anything extra for our product because we weren’t marketing our milk as organic,” he said.
“We were feeding good feed to our cows but we still had all those silos and chopping equipment that I would have to replace—and have to borrow more money—so all of a sudden I realized this was crazy. In 1991, I was reading about grazing dairies, so we started grazing our cows rather than feeding them harvested forage. Then I read about seasonal dairying and the light bulb really went on,” explained Alan.
Many of their cows were calving in the fall, so he went to a fall seasonal calving. “This was before I really understood the seasonal aspects in relation to the grazing and the cows’ nutritional needs. Our fall calving was kind of nice because the cows were dry in the summer when it was hot, but it didn’t match up very well with the nutritional level of the grass for the cow and calves,” he says.
So the next year they delayed breeding six months, and brought the cows back into a spring calving window.
“Ever since 1993 or 1994, we’ve been spring calving our seasonal herd. But during the late 1990s, we were still selling our milk and crops on the commercial market.” He realized that they were going the right direction with their management, but were not getting paid for their extra efforts. The debts were still there and they weren’t making progress on reducing those.
“It was like our ship was slowly sinking. So in 1998, we made a tough decision. Cropping had been a part of our farm for a long time, but I decided to quit the commercial grain farming. We still had debt on some of our equipment and some of it was nearly worn out. Rather than borrow more money to replace it, we sold the equipment, and didn’t make enough to cover the debt on it. We gave up some of the land we rented, and just concentrated on the farm that Mom and Dad owned and the one I owned,” he says.
“We sold the silos (essentially gave them away) and put the whole farm into perennial grasses for a pasture dairy. For a couple years we were just milking the cows but were still selling the milk on a commercial market. We realized we needed to make some changes on the marketing side. In the fall of 1999, Mary and I started looking around to pick up some ideas. We decided to process our milk on the farm,” he said.
They bought some used equipment from a fellow who had made cheese in a winery. “I had never made cheese in my life, but we remodeled our barn and put in the equipment. The man who sold it to us came up here and helped us make the transition and gave us some quick lessons. We became cheesemakers.”
That next year was the start of a big change to our dairy farming business plan. “We went to seasonal grass dairying and direct marketing, producing everything on our farm. We didn’t really know what we were doing, but it was a leap of faith,” he said.
“Back in 1992, we had also had some experience with holistic management. A man I worked with here had some experience in sustainable agriculture. Mary and I took a couple of small training courses that helped us a lot—to steer us along the path with some key ingredients. It was still been a tough battle with the debt load; the debt was like a rock around our neck that kept us from going anywhere. Then a couple years ago we finally got things paid off.”
As part of holistic management in our dairy farming business plan, they looked at some of the changes they were making in 2000.
“We wanted to make some changes that would allow our children to farm with us later if they wished. We have three children, Kate, Luke, and Jess. If they wanted to come back to the farm, we wanted to have a way to work them in, too. This model of holistic management was helpful and really fit for us; we used those principles as we made the changes. We structured things so that they could farm with us if they wanted, and if they didn’t, that would be fine, too,” Alan said.
“Our daughter, Kate, the oldest, loved cows all her life. That’s all she really wanted to do—take care of cows. She went to Purdue during 1998 to 2002, and after she graduated I let her take over a lot of the management of the cows and grazing. I helped wherever she wanted me to, but I gave her more of the responsibility, and the leeway to make mistakes. That’s what my dad did with me, and this is how we learn the most.
“My father was steeped in the commercial end of it with use of fertilizers, etc., but he was still very stewardship-minded in terms of taking care of the land with good soil and water conservation. He allowed me, when I came back, to take over a lot of things, and I’m sure he cringed many times at some of the changes I was making. He allowed me to make the mistakes and learn as I went,” Alan said.
Kate has had the same freedom to try things and make a few mistakes.
“She has tackled it and we all continue to make mistakes and we learn from them,” he said. It’s nice to see a family team effort on the farm.
“As we made the transition to on-farm processing, we still sold a little milk to the co-op for a few years. At that time there were not very many people making this kind of change. Our milk levels fluctuated a lot in what we were shipping to them and they finally told us they wanted all our milk or none of it. So we quit sending any milk to the co-op and everything we produced we have sold ourselves,” he says.
Marketing Up: A Key Component of a Dairy Farming Business Plan
“We started going to farmers markets, right after we began processing our own milk, and also had a little store at the farm. We’d gotten some ideas earlier, when Mary and I and our three children went to Switzerland, the year that my father passed away. We visited with our distant cousins and re-connected with some of our roots. We saw how everything was sold locally. We enjoyed seeing the small farms our cousins had, and how each village had their own cheese-making businesses, dairies and meat markets. Everything was produced locally. This was something I was really interested in but it was fascinating to see this in action,” Alan explained.
“We came back all fired up to market our own product. This was a dream I’d always had, but this brought it out in the open and we decided that this was what we needed to do. That’s when we remodeled the barn and made the little shop, with this pie-in-the-sky dream that everyone would come out to our farm to buy our milk products. This didn’t happen quite like we hoped, so as we grew we took our products to farmers markets. This worked pretty well because this gave us more exposure and we met a lot of people, and this led to other marketing venues, including some restaurants and different markets,” he said.
“Over the past 15 years we’ve done a lot of different things in terms of marketing, but our store and the farmer’s markets have been the cornerstone that helped us build. For a while, we were taking our products to four farmers markets, and this was time-consuming because we were limited on help. By the time we did the milking, processing, and packaging and delivering, it kept us all really hopping,” he said.
“The farmer’s markets were very helpful for us but we are phasing those out now, focusing more on direct marketing here at the store and some mail order sales. We hope to be able to direct sell everything we produce,” Alan says.
One concern is the increasing challenge with more government regulations.
“We were seeing a lot of that—government interference—regarding licensing and inspections. We sell raw milk, too, so that has been a challenging issue. We were trying to move toward a little more sovereignty and get out of some of these headaches. We surrendered our processing license and grade A license with the dairy. We were selling all our raw milk products (milk, butter, cheese and cottage cheese, etc.) as pet food, under a pet food label, because we have a lot of customers who want these. This brought on a whole different aspect of marketing because our normal venues like restaurants and wineries wouldn’t want to be selling pet food,” says Alan.
“So we pulled back from this focus and have been just concentrating on our store. We still go to one farmer’s market but are also trying to build up some drop-off points. This has changed the complexion of our marketing. In the process, we have taken a hit, during this change, but we felt in our heart that this is what we should do, because of the purity of our product and the desires and needs of customers.”
The dairy cattle on the dairy farm have been a variety of dairy cow breeds over the past 30 years. His father had Guernseys.
“Then we got Holsteins and did some crossbreeding with Holsteins and Guernseys. Then we brought in some Jerseys and did some crossing with them. After that, we brought in some Dutch Belted cows and milking Shorthorn, and then really started focusing on the milking Shorthorns. We have been breeding them for quite a few years and breeding some of our own bull calves. We also brought in some milking Devon. The past 10 years our breeding has been very focused on milking Shorthorn and milking Devon and developing them,” he said.
“We’ve been doing a lot of linebreeding, selecting for cattle that do well in a grazing dairy. These cattle do very well for us and are nice dual-purpose animals for meat and milk. We are just trying to fine-tune this to make them better and have been working closely with Gearld Fry for a few years, trying to learn the various aspects of linear measurements of cattle and developing our own breeding bulls, selecting cattle that work the best for us. But it’s a slow process,” he said.
It’s a long journey, working toward goals with genetic improvement in cattle. The genetic aspect is fascinating and challenging. “This is one of those things where the more you learn, the more you find out you don’t know,” he said.
The Family Adjusts to the New Dairy Farming Business Plan
“It’s all been rewarding and I don’t think we ever wanted to do anything different. Our children are very interested in and supportive of what we are doing. Kate is now a part of our dairy operation, but our sons didn’t feel led to be an active part in it after they grew up. All the kids did chores growing up, and were a help on the farm.”
Kids that grow up on dairy farms develop a good work ethic and are able to take on responsibility and do well in whatever walk of life they choose.
“Our middle son, Luke, went into aviation training. He wanted to fly, but went into air traffic control and has worked at a couple different airports and is now at Indianapolis. He seems to like that job. He’s married and we have two grandchildren. Our youngest son, Jess, is at Hagerstown, Maryland, working in the corporate world and also involved in ministry. He enjoys the farm but felt called to other places, too.”
His wife Mary has always had an active role with the dairy and doing bookwork for the dairy farm.
“In the early years when we started processing our milk, we were both down at the barn all the time. We sold a piece of land to neighbors who developed a small sheep operation, and Mary worked a little with them, too. Since we downsized our farm operation, we are back to Mary and I and our daughter Kate doing our dairy. Mary helps with a lot of the drop-offs and we both work together on that. We just juggle things around and make it work. In all of our management decisions we always talk it over and bounce ideas off each other, the three of us, and this helps us come up with the best approach we can.”
Have you tackled a new dairy farming business plan? What changes did you make to adjust to trends in the marketplace?
Originally published in Countryside July/August 2016 and regularly vetted for accuracy.