Developing Pasture-based Dairy Systems for Family Farms

Final Report for LNC00-173

Project Type: Research and Education
Funds awarded in 2000: $81,463.00
Projected End Date: 12/31/2002
Region: North Central
State: Missouri
Project Coordinator:
Robert Kallenbach
University of Missouri-Columbia
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Project Information

Summary:

Our pasture-based dairy education and outreach program addresses the problems facing Missouri’s small family-operated dairies. Family dairies have been declining because of inadequate financial management, high input costs per unit of product sold and increasing environmental regulations. This project confronts these problems by forming local grazing groups of ten to 20 dairy producers. Groups learn improved financial practices and how to use management-intensive grazing to lower input costs and meet environmental regulations. The result has been stronger family-operated dairies that are financially stable and expanding.

Introduction:

Background of the problem

One-third of Missouri’s family dairy producers have left the dairy industry over the last eight years. Although competition from large confinement dairies is a factor, there are three main reasons that small family dairy operations fail: 1) lack of financial management; 2) high input costs per unit of milk sold; and 3) the cost of complying with environmental regulations. To stay in business, producers need to improve their financial management and production skills. Producers who learn these techniques can increase profit per cow by $279 per year; for a typical 83-cow dairy, this represents a $23,157 increase in net income. In addition, the dairy farms are more environmentally friendly.

The rapid disappearance of dairy farms erodes both state and local economies. Missouri dairy farms contribute $400 million/year in milk and meat sales to the state’s economy. Using standard economic multipliers, this expands to $1 billion/year in total statewide economic activity.

Literature Review

Pasture-based Dairy Production:

Several research projects (including several SARE projects) show that management-intensive grazing (MiG) can be a viable alternative to confinement feeding for dairy farms. Numerous studies show that management-intensive grazing can be used to provide inexpensive but high-quality dairy feed (Petzen, 1988; Murphy, 1988, Holden et al., 1994; Rotz et al., 1999; Wagner, 1999). A study of Pennsylvania and New York dairy farms found that a moderate intensive grazing system could provide dairy-quality feed at less cost than hay or corn silage (Hanson et al., 1998a). In addition, they found that pasture-based dairies were more likely to be environmentally sustainable because they used much less commercial fertilizer and pesticides.

Milk production for cows in a pasture-based system is commonly perceived to be extraordinarily low. A review of the literature shows that this is not necessarily true. Hanson et al. (1998a) found that milk production per cow was nearly equal from grazing and conventional dairy farms in Pennsylvania. Posner et al., (1998) reported a rolling herd average of more than 17,000 lb for a well-managed grass-based dairy in Wisconsin. On the other hand, Kolver and Muller (1999) found that average milk production for pasture-based dairies was about 30 percent lower than for confinement dairies. In most instances where pasture-based dairies produce substantially less milk than conventional dairies, it is because the farm managers do a poor job of managing pastures (Murphy, 1990; Zartman, 1994; Fales et al., 1995; Rust et al., 1995). The key to success seems to be education; specifically, once dairy farmers learn management-intensive grazing skills, milk production usually follows.

Although milk production is often equal or lower for pasture-based than for confinement operations, profit margins are usually higher for pasture-based dairies. Research from Vermont, Michigan, Ohio, Pennsylvania, Minnesota, Wisconsin and New York shows that adopting pasture-based dairying can substantially reduce input costs (Ford, 1996; Hedges, 1997; Hanson et al., 1998b; Dartt et al., 1999; Rotz et al, 1999). In a SARE-sponsored project, Murphy (1988) found that the net return to labor, management and interest was six times higher ($47,628) from a pasture-based dairy herd than for a similar sized herd in a year-round confinement feeding system ($7,729). In Wisconsin, Posner et al. (1998) found that net farm income rose from $21,500 to $54,000 when a dairy farm switched from confinement feeding to a pasture-based system. In addition, they found that the daily labor input in the winter was reduced from 12 hours to 3.5 hours per day for a grazing vs. a conventional dairy farm. This work suggests that pasture-based dairying is not only profitable but also gives producers more time with their families.

An additional benefit to grass-based dairying is that it is more environmentally friendly. Rotz et al., (1999) estimated that grass-based dairy farms would store and handle 85 percent less manure, making them much less likely to contribute to pollution of streams and groundwater supplies than were confinement dairy farms. Pasture-based dairying forces cows to distribute manure in pastures across the farm, reducing the need for large lagoons and their associated construction costs (Rotz et al., 1999). In addition, pasture-based dairies spend less on odor containment, fly control and manure-handling equipment (Dartt et al., 1999). This literature suggests that dairy farmers and regulatory agencies alike find that letting nature take care of manure is the cheapest and best way to manage the problem.

Farmer-to-Farmer Education:

Many researchers have found that farmer-to-farmer networks and mentorship were an effective method to deliver information to producers (Schroeder,1994; Bilek, 1996). Lass (1995) found that farmer organizations that were organized into “core groups” were more likely to be economically viable than groups without this type of organization. In addition, Lass’s research suggested that developing networks or core groups of producers can increase satisfaction with farming and help rural communities develop a sense of belonging. All of these studies show the importance of developing lines of communication between farmers, researchers, extension educators and agency personnel.

Project Objectives:
  1. Train a core group of 65 family dairy farmers to practice sound business principles, focusing on profitability. The performance targets are for all participating producers to develop and use a written business plan and for 85 percent of the producers to increase their net income by 10 percent.

    Reduce feed costs by 30 percent by showing participants how to use management-intensive grazing to avoid much of the high cost of confinement feeding and making and storing hay, haylage and/or silage. The performance target is for 85 percent of participating producers to produce milk for less than $12.50/cwt.

    Improve the aesthetic and environmental condition of family dairy farms by utilizing pasture-based management techniques to spread manure in pastures rather than building expensive lagoons. The performance target is to achieve 100 percent compliance with environmental regulations as enforced by the Missouri Department of Natural Resources.

    Increase the social interaction and sharing of ideas between dairy farmers by facilitating the formation of local “grazing groups,” producer-organized forums that stimulate the sharing of expertise and goal setting. The performance target is to form regional grazing groups of 10 to 20 members who meet regularly. Sixty-five percent of the participants in these groups will become expert producers.

    Improve the quality of life for dairy families and their local communities. The performance target is to increase quality of life as reported by participants.

Research

Materials and methods:

Seventy-five dairy producers willing to become experts in pasture management and financial record keeping formed our “core group.” Regional dairy specialists, along with specialists in agronomy, farm management and community development, helped identify these producers. These producers own family-sized dairy operations ranging from 25 to 200 cows. With the help of University of Missouri Outreach and Extension specialists, core group producers began monthly discussion groups to share ideas. In addition, the core group held longer, in-depth learning sessions to discuss farm and family goal setting, enterprise analysis, record keeping systems and advanced grazing management.

After being trained, members of the core groups have begun to provide long-term expertise to a larger, secondary audience: other dairy producers not enrolled in the initial program. Producers in the core group have teamed up with regional extension specialists to host other educational efforts. These efforts include on-farm demonstrations, tours, pasture walks and financial planning workshops. Initial contact with producers enabled project leaders to plan training efforts based on actual producer needs and requests.

Educational Materials and Web Site

Learning materials were developed and a Web site was constructed and maintained. Written materials for financial management and pasture-based dairy production were prepared in Year 1. The quick preparation of initial manuals was possible because some of the written material could be modified from resources tailored to the forage/beef extension program, such as the Missouri Grazing Manual. The project team for programming produced a revised version of the dairy grazing manual in early 2002.

The Web site includes materials related to pasture-based dairy production in Missouri and served as a resource, an “internal” bulletin board and a calendar of events for the group. Core group participants also received a short monthly bulletin by mail that recaps monthly meetings and training sessions.

Training the Trainers

At the outset of this program, the project leaders, program coordinator, producers, and state and regional specialists met to identify common objectives and expected educational programs and outcomes. Approximately twelve regional specialists in dairy, farm management, engineering, agronomy and community development participated. Topics at this initial planning meeting included the economics of dairy farming, computer record keeping, pasture management for dairy cows and social factors that influence the adoption of pasture-based dairying. Sessions for the advanced training of regional specialists in specific areas such as computerized record keeping (for Farm Management Specialists), management-intensive grazing and pasture management (for Agronomy and Dairy Specialists) and feeding dairy cattle on pasture (for Dairy Specialists) were also planned.

Training the Core Group

Regional specialists, with the help of State specialists, trained producers in the core groups in two areas: financial management and pasture-based dairying. This training was delivered through three workshops. The first workshop involved setting realistic goals and taking an inventory of farm resources. The second workshop involved record keeping and business plans, while the final workshop involved grazing technology for dairy cows. Producers in the core groups learned how to:
• set achievable goals for the family business;
• set up and maintain computerized records and business plans; use records to make management decisions;
• communicate with other producers in group meetings and via the Internet; exploit pasture resources;
• maintain pasture quality though the growing season; cope with stresses associated with change;
• manage family concerns during transition to pasture-based system;
• increase understanding of each family member’s goals.

Core Groups

A core group of 75 dairy producers was formed in four stages, beginning with an initial group of 20 producers (Core Group A). Since it was not logistically practical to form a group of 75 producers in one month and train them in record keeping and pasture management, core group A was formed initially; Core Group B was formed six months later, and so on.

Core Groups A and B are located in southwest Missouri. Core Group C is located in south central Missouri and Core Group D in central Missouri. Regional dairy specialists, along with specialists in agronomy, farm management and community development identified potential producers that owned family-sized dairy operations.

Facilitating Core Group Activities

Monthly Meetings

Following training, each core group held monthly discussion groups to share ideas and experiences. These meetings addressed topics on financial and production issues. Some meetings were conducted as “pasture walks,” tours of local pastures with an expert for informal discussion. Regular monthly meetings continued through the entire program, serving both as a technical support group for producers and a data pool for monitoring progress and preparing impact reports. Individual core groups made decisions about what topics they wanted covered based on their personal needs and goals.

End of Year Planning Meeting

At the end of each year, members of each core group joined with project leaders at an annual summary and planning meeting. At this meeting project leaders reviewed the events of the past year and made plans for the following year. At this meeting a list of topics of interest to the producers was made so that project leaders could coordinate activities for the following year.

Annual Lenders Meeting

At the beginning of each year core group producers invited their bankers and other agribusiness people to a meeting held at the Southwest Research and Education Center near Mt. Vernon, Missouri for a meeting. There, producers participating in this project presented a summary of the financial data collected. Both producers and lenders said they found the information to be valuable.

Ozarks Dairy Grazing Conference

Originally planned for August, 2002, this conference will be held April 8-9, 2003. The conference will attract attendance from other producers, university researchers, industry representatives, public agency workers and legislators. The conference will be organized and conducted by project leaders from the university, with dairy producers from the core group. The conference agenda will focus on the success and experiences of pasture-based dairies as documented on core group dairy farms.

Training producers as “Expert Producers”

Dairy producers in the core group received additional training in leadership skills at the monthly meetings. Special attention was focused on developing the necessary social relationships between dairy families to enhance trust and confidence in order to provide long-term support to one another. Dairy producers have become “expert producers,” and they are “taking the message” to other producers through invited speaking engagements, presentations, participation in producer panels and writing articles for the popular press. Regional extension specialists will continue to assist the producers in these efforts.

Documenting Program Impact

Every three months, project leaders, regional specialists and the core group document the financial and production status, as well as environmental condition of participating dairy farms. Results were compared to the pre-program benchmarks.

Pre-program Benchmarks:

• Sixty percent of producers have no written plan to sustain a profitable business.
• Producers currently spend $14.80 per hundredweight to produce milk.
• At present, approximately 20 dairy producers in southern Missouri use management-intensive grazing.
• Currently DNR is enforcing violations against 26 dairy farms in southern Missouri.
• Few learning opportunities exist for family dairy producers to learn about pasture-based production.

This has been an education and outreach program. Throughout the project, project leaders, regional specialists and core group members worked together to document the improved financial status, environmental conditions and quality of life of family dairy farms. While focusing on the 75 participating producers, program results were disseminated through publications and presentations at the local, state and national level.

Research results and discussion:

Core Groups A and B formed prior to receiving SARE funding. These two groups are located in southwest Missouri and meet regularly. In September 2001, they organized as an affiliate of the Missouri Forage and Grassland Council to take advantage of the purchasing power of a group and to have a voice in forage related issues. Several members from this group have become recognized locally and nationally as dairy grazing experts. Members from these two groups often attend other core group meetings and showcase their farms on pasture-walks.

Core Group C formed in July 2000. The group meets monthly and has a base of 22 producers. There is a mix of producers who have been operating pasture-based dairies for some time and those who are new to pasture-based dairying concepts. Some of the producers in this group are new to the United States and Missouri. The established graziers bring experience to the group, while the new graziers are willing to try new things. Both have benefited from the support and training the project has provided.

Core Group D had an introductory meeting at the end of 2001. Twenty-five producers signed up. This group is unique in that it is comprised almost entirely of Mennonite dairy farmers. To date the group has held ten pasture walks, attended a forage management workshop at the Southwest Center in Mt. Vernon and held their own pasture-based dairying workshop in Versailles, Missouri.

Fostering Expert Grazers

After the first year of the program, we revised our goal to have 65 percent of the producers become expert producers. We still encourage farmer-to-farmer information exchange, but refined our definition of an “expert producer.” Our new goal is to recognize and foster the professional development of three expert producers in each core group. An expert producer is a farmer in the program who has exhibited expertise by 1) being asked to speak at a dairy or grazing conference 2) taking the initiative to develop on-farm research in MiG, 3) has been interviewed by a regional or national publication on their dairy operation 4) at group meetings, is the person that other members regularly seek out for advice or is the one that outsiders must convince before the group as a whole will take action.

Over the last two years we have identified and worked with 12 expert producers: There are 4 producers each in groups A and B and 2 producers each in groups C and D.

Core Group Survey Results

In 2001, we conducted a survey of those participating in core groups A, B and C. Below is a summary of their responses. Percentages in parentheses indicate a response of “agree” or “strongly agree”.

Economic data from Missouri pasture-based dairies:
• Improved working with lenders (46%)
• Improved business decisions (91%)
• Helped identify strengths/weaknesses in their dairy operations (96%)
• Increased profit margin/cow ($379)

Financial Management:
• Have a written business plan (27%)
• Have split personal finances from dairy (64%)

Herd Management
• Have implemented a biosecurity plan (45%)
• Have renovated or built new dairy facilities (40%)

Pasture management
• Make better use of grazing practices (96%)
• Have planted 3+ improved forage varieties (55%)

Environmental
• Operation is more environmentally friendly (77%)

Social
• More leisure time and a better quality of life (50%)

Results compared to Pre-program Benchmarks

Pasture-based dairies produce milk for less. The production benchmark for this project is for 85 percent of our graziers to be able to produce milk for less than $12.50/cwt, the average for confinement dairies. They have surpassed that goal for the second year by producing milk for $11.57/cwt. in 2001. This is 15 percent less than confinement dairies overall. Lower production costs allow small family dairies to compete with larger dairies.

Producers are managing finances better. After participating in financial management workshops, 64 percent of producers report they have split their personal finances from their dairy’s finances. By keeping separate financial records, they have better information from which to make sound business decisions. We are encouraged that nearly all producers polled find the economic data we have collected from them has helped them make better business decisions and identify their strengths and weaknesses. The next step will be to encourage them to use this information to set business goals.

Pasture-based dairies are expanding. This year six producers from core groups A and B are considering expanding their operations by increasing herd size. This will collectively bring an estimated $4,062,300 into their communities. Lenders are particularly interested in helping graziers because of the economic opportunity that pasture-based dairying affords. Forty percent of our producers in core groups A, B and C report that they have plans to renovate or build new dairy facilities.

Producers are implementing MiG. Producers in the project are continuing to improve their management-intensive grazing systems. Nearly all report that, after attending the forage workshop and regular grazing group meetings, they are able to make better use of grazing practices. More than half have met the project goal of planting three or more improved varieties.

Environmental violations are minimized. This year only one producer out of 75 had an enforced environmental violation by DNR. More than two-thirds of producers report that their operations are more environmentally friendly.

Our producers are happier. Perhaps the most encouraging impact this program has had is that 50 percent of producers participating in this program report that they have more leisure time and a better quality of life.

Economics of pasture-based dairy production

Economic data from pasture-based dairies has been collected from the producers in the program for the last three years. A summary of this data is presented in the economic analysis section below.

The production and economic data we have collected from these producers suggests that pasture-based dairying works. Pasture-based dairy production provides producers with a low-cost source of feed for their herds; it requires a lower capital investment for farm equipment; and it reduces the costs of environmental regulations that pertain to waste disposal.

Research conclusions:

The impact of the project is presented below under the headings of medium- and long-term outcomes. Impact is further sub-divided as illustrated by the project logic model on page 7 of this report. Short-term impact would be the knowledge producers gain from the activities (meetings, pasture-walks etc) attended; those are too numerous to list in this report.

Medium term outcomes

Assessment

Medium-term impact is evaluated through surveys and planned observations. The number of producers with financial and/or production recording systems is used as an indicator for making better business decisions. The number of days grazed annually and the number of improved forage species provides information on how well producers are using MiG techniques. The number of Department of Natural Resources on-site inspections indicates how successfully producers are using approved waste management systems.

Use records as a basis for making better management decisions

Part of successful record-keeping involves cow identification. Following a demonstration of different cow branding systems two months ago, three producers will purchase branding equipment to brand their cows. This will allow them to identify an individual cow’s performance and make better management decisions.

Because of this project regional specialists now have production and financial data for grazing dairies to use when advising clients. Data from the project was made available to regional specialists at a recent Professional Development Experience (PDE). Producers statewide will benefit from this information.

The three producers of two dairy farms, Bernie Van Dalfsen and Kirk & Cathy Emig, are currently constructing new double-24 and double-10 parabone parlors, respectively. This is a direct effect of the confidence placed in the economic data collected by this project. Pasture-based dairies are the only type of dairy system that has been experiencing this type of new construction. During this project producers have constructed 15 new parabone parlors.

Successful record-keeping involves the identification of heat or estrus in cows and the health and status of the reproductive tract of cows in the herd. Following a demonstration in April, one producer and his veterinarian utilized ultrasound to demonstrate, at a field day its effectiveness at early pregnancy detection. The cows on this producers farm had been synchronized using a new protocol suggested by his veterinarian, semen supply company and Stacey Hamilton, Core Group A leader.

Permanent identification of each dairy animal is critical for making better management decisions. Following a demonstration on the use of freeze branding in 2002, Jeff Buckner, a participant in this project is using this methodology. Due to the nature of a double-sided milking parlor, it is important the brand be visible from either side of the parlor. Jeff is experimenting with different branding locations to determine the most effective. He now plans to brand his 250 cow herd.

Practice MiG techniques

Prior to the start of this project only five producers in southwest Missouri were known to be extending the grazing season. Currently 75 percent of participants plan to use stockpiling and/or winter annuals to extend the grazing season.

Bernie VanDalfsen, Ronnie Choate, Clay McQuiddy and John McArthur, project participants, have purchased irrigators for irrigation and waste disposal. Jeff Buckner and Charles Fletcher are interested in using low cost irrigation systems and exploring the options. Other participants are interested in using low cost irrigation systems and are exploring available options.

Project participant John McArthur is conducting an on-farm research project on the effect of irrigation on crabgrass and winter annuals. He is using a spider-type irrigator. The study is supported by a SARE grant that was awarded for 2001. Mr. McArthur will compare forage yield to similar non-irrigated paddocks and calculate the cost of irrigating.

Even though core group D has only been meeting for a short time, ten producers have adopted management practices to improve their forage quality, specifically relating to their perennial ryegrass production management.

Five producers from this project have been selected on to the Southwest Center (SWC) Dairy grazing advisory committee. Many of the demonstrations/trials being conducted on the SWC Dairy are looking at issues identified by this group. For example, an irrigation study is currently being conducted at the SWC Dairy. The yield and quality of bermudagrass, crabgrass, perennial ryegrass and an alfalfa/orchardgrass mixture are being compared under irrigation. The results from this trial will give producers a better idea of how improved species and/or irrigation can benefit them.

Producers in this project also requested the comparison of two warm-season perennial grasses (bermudagrass and Caucasian bluestem) at the SWC Dairy. Data was collected for two years and the results suggested that although bermudagrass produced higher quality forage the cows grazing Caucasian bluestem yielded 4 to 5 pounds more milk per day over the 90 day study.

Workshops have stressed the importance of feeding high quality forages, whether it is those grazed or in supplemental hay feeding. As a result, a group of participants are working with a dry forage producer to arrive at an arrangement where they will purchase his product, with the price being dictated by the relative feed value of the hay. Such an arrangement will result in higher quality forage, since there is a financial incentive, which will in turn result in higher milk production by the producers feeding the forage.

The use of a low-cost traveling gun “spider,” as a means of spreading parlor effluent has been demonstrated in the past and Joe Hengler, MU Irrigation Specialist, discussed the possibility of using irrigation to increase the productivity of grazed forages. Project participant John McArthur took the concept and irrigated Red River crabgrass. He was able to irrigate three acres in 24 hours and increased forage production and grazing days by 25 percent. Another producer hopes to have his system functioning in 2003.

During the typically hot summer months, dairy grazing systems must pay particular attention to water availability and shade. Project participant Charles Fletcher started a farm in 2001 and did not have shade for the cows. He acquired a grant to evaluate the feasibility of using portable shades with accompanying water tanks. Charles built five shades on wheels and hooked them up in tandem for ease of daily movement. He has seen a significant increase in forage intake when the shades are used. Other participants have obtained the plans for the system and are seriously considering the construction of similar units for their operation.

Plant improved forage species

Fifty-five percent of producers in the program have three or more improved forage species. Many of these producers have renovated pastures that comprised infected tall fescue.

Producers in this program continue to use improved forage species. Five project participants established Red River crabgrass, an improved warm-season grass. Five participants began using forage-type corn for summer grazing. Corn is established approximately 90 days before the time it is needed for grazing. Those implementing this practice in 2002 had forage available during September, when others did not. It is anticipated more grazers will utilize corn in 2003. Sixty percent of producers are planning to use a warm-season forage next year.

Use an approved waste management system

Because grazing cows spend most of their time in the paddocks, this is where they deposit most of the manure. However, dairy producers building new parlors to milk grass-fed cows on pasture have to build waste management systems based on the recommendations developed for conventional dairies. Therefore, the waste management systems built are unnecessarily large and costly. We hope that as more information becomes available from this project, regulatory authorities will recognize that grazing dairies do not need large and costly waste management systems to be environmentally friendly.

Food & Agricultural Policy Research Institute (FAPRI) is modeling a holistic approach to MiG dairy operations by incorporating a waste management program in the model. They are using information supplied by producers in this project as the model. Until this project was initiated, MiG operations were not considered in modeling projects by FAPRI, due to the lack of adequate financial information. Further analysis of the economic data collected in this project, on their part, led them to conclude that MiG type operations are a very viable alternative and profitable means of dairying. A cursory review of the lower waste handling expenses of a MiG dairy compared to a confinement operation will add to the economic returns of MiG operations.

Long term impact

Assessment

The ultimate success of the program (long-term outcomes) is assessed in three primary areas: profitability; environmental friendliness; and producer satisfaction. We collect data for these assessments through surveys and phone interviews, as well as observation, on-farm visits by core group members, and county records.

• Profitability is assessed by the following financial indicators: capital investment per cow and per cwt of milk shipped, cost to produce cwt of milk, operating margins, both in dollars per cow and dollars per acre, and return on assets. Milk shipped per cow and per labor unit and the cull rate also help provide information on profitability and its long-term sustainability.

• Environmental friendliness is evaluated by the number of Department of Natural Resources (DNR) violations reported and the number of complaints registered by local residents.

• Producers are surveyed for demographic information to find out how they feel about the future of the dairy industry and their satisfaction.

The continued operation of the program is an additional long-term assessment. This relies on producers passing on the knowledge they have gained through the program to other producers. Therefore, the number of producers invited to speak at state/regional/national conferences is recorded and reported. The number of popular press articles and the number of producers serving as consultants to other grazers provides further evidence of the success of the program.

Family dairy farms are more profitable

Financial and production data have been collected for the last three years. These data are summarized below. Grazing dairies produced milk for $8.97 per cwt in 1999, $9.76 per cwt in 2000 and $11.57 in 2001. Producers have lowered the cost of production by 30 percent on average, well below the targeted 20 percent reduction (pre-program benchmark was $14.80 per cwt). Currently there are no data available for conventional dairies in Missouri, but the cost of production of large conventional operations in the high-plains is similar to the grazing dairy farms in this study.

Lenders in southwest Missouri had little information on which to make loan decisions before reviewing the economic data collected from producers in our project. Now lenders know that pasture-based dairies work, and that means more money is available to family farmers who want to make improvements or start a new grazing dairy. Farm Credit Services uses financial data collected from producers in this project to analyze future loans for pasture-based dairies. Three other lending institutions use data from this project to assess and approve loans for pasture-based dairies.

Producers are benefiting from the financial and production records being collected as part of this project. At a time when the industry is experiencing a decline in numbers, interest and expansion in grazing continues to grow. Much of the credit for this phenomenon can be attributed to this project. Based on the data from this project agricultural lenders recognized the profit potential of grazing dairies and were willing to offer financing for both expansion and new operation. This growing interest will not only help maintain the infrastructure for the industry, but each dairy remaining will have an economic impact of approximately $535,000 to the community. New barn construction is a sign of financial stability for producers.

For example, John Boone of Dade County is starting a new MiG dairy operation. The lender solicited the input of Tony Rickard, core group B project co-leader, in developing the loan portfolio for the producer, using the data collected through this project. This lender attended the agricultural lenders workshop in 2001.

Publicity of this program continues to generate interest in the implementation of grazing systems on traditional dairy operations. Currently, we are working with two producers that are interested in converting to a pasture-based system. They will construct new parabone parlors, the type preferred by grazers. One of those producers has already converted his parlor, and we are working with him in designing the paddock and water system.

Bernie Van Dalfsen completed the construction of a double-24 parabone parlor in November. This will be the largest parlor of any producer in this group, an indication of the success of pasture-based dairying.

Producers using MiG are happier

When surveyed in 2001, over 50 percent of producers said that they have more leisure time or enjoy a better quality of life since converting to a pasture-based dairy system. The producer testimonials below would seem to support this.

Successful producers train other producers in successful management practices

A producer from Washburn, Missouri participated on a producer panel at the annual Missouri Forage and Grassland Council conference. He is also a recipient of a 2001 SARE grant for his project “Heat Stress Management Utilizing Portable Shades on MiG Dairies.”

A husband and wife team from Lockwood, Missouri was also awarded a SARE grant for their project “Small Scale Irrigation to Enhance the Profitability of MiG Dairies”. They also serve on a committee to explore the production and niche marketing of organic or “naturally” produced milk.

A producer from Reeds, Missouri was invited to give a presentation on ”Managing an Expanding Grass-based Dairy” at the Great Lakes International Grazing Conference in Shepshewana, Indiana.

Seven members from Core Groups A and B were invited to meet with FAPRI (Food and Agricultural Policy Research Institute) for their input on the design of an economic model for dairy grazing operations. The model will be used to analyze economic and production data from grazing dairies in Missouri and the United States. The producers initially met with FAPRI in 2000 and have just completed an update.

Five members from Core Groups A and B were invited to meet with FAPRI (Food and Agricultural Policy Research Institute) for their input on the design of a nutrient management model for dairy grazing operations.

Graze, a national magazine produced in Wisconsin, asked grazier Bernie VanDalfsen to join their panel of advisors. Each month, the magazine poses a question about grazing to their panel of six advisors. Graze published a feature story this summer about the innovative Southwest Research Center dairy and four producers in our program who run pasture-based dairies. Bernie VanDalfsen also spoke on pasture-based dairying in Missouri at the Mid-Atlantic Dairy Grazing Conference in 2001.

John and Linda McArthur’s dairy farm was recently featured in the regional publication Ozarks Farm & Neighbor. The McArthurs had an on-farm pasture irrigation research project this summer. At the Missouri Forage and Grassland Councils annual meeting, John McArthur was invited to speaker on “Dairying with a pasture-based system.” Mr. McArthur was also invited to participate in a panel discussion at a dairy day in Monett, Missouri.

In another example of sharing experience and ideas, Stefan Wick, a young member of one of our grazing groups, is building a new dairy barn. Bill Crutcher, a member of the same grazing group, has recently retired and sold his cows to Stefan Wick. While Stefan is finishing the barn, Bill is leasing his farm to Stefan so Stefan can keep milking. By helping each other during this transition, both enjoy an income.

Several tours were conducted for dairy grazers from other regions, including Texas, on participant’s farms. Attendees were interested in the types of parlors being built and used by pasture-based dairies and the forages being grazed.

Charles Fletcher was a speaker at the SW Region Extension Council workshop on the impact his participation in this project has had on his dairy operation. This presentation generated much interest from the representatives of the 16 counties comprising the SW Region. One representative, a loan officer at a bank, made the statement that he would like to send several of his clients to see the management practices used on Mr. Fletcher’s operation to see how they might improve their bottom line.

Charles Fletcher and Bernie Van Dalfsen were invited to participate in a panel discussion at a dairy grazing conference in Spring Hill, Tennessee. The majority of those participating in the conference were representing Universities or agencies.

Economic Analysis

The following two tables summarize the financial data collected over the last three years. A comparison to large conventional dairies from the high-plains has been included, although the environment under which they operate is quite different from that of southwestern Missouri. We are investigating other sources of data for comparison. There is currently no dataset of conventional dairies in Missouri and we did not have the resources to compile one.

Operating margin of grazing dairies for 1999, 2000 and 2001
Item 1999 2000 2001
$/cow $/cwt. milk $/cow $/cwt. milk $/cow $/cwt. milk
Number of cows 96 ¾ 92 ¾ 88 ¾
Milk shipped (lbs/cow) 13,660 ¾ 13,682 ¾ 12,526 ¾
Number of days grazed 239 ¾ 235 ¾ 212 ¾

Total Income 2,153.27 15.77 2,019.17 14.75 2,290.95 18.29

Expenses:
Cow 1,107.90 8.11 1,172.45 8.59 1,257.28 10.04
Forage 118.93 0.86 161.28 1.17 191.98 1.53
Total Expenses 1,226.62 8.97 1,333.73 9.76 1,449.26 11.57

Operating margin 926.65 6.80 685.44 4.99 841.69 6.72

Comparison of Missouri MiG dairies to large conventional operations in the high-plains.
1999 2000
Grazing Conv. Grazing Conv.
lb Milk Shipped 13,661 21,472 13,682 23,483
Cost/CWT Milk $8.96 $10.53 $9.76 $10.26
No. Cows 96 1,149 92 1,309
% Cull Rate 20 39 18 37
Note: We were unable to obtain 2001 data for the large conventional operations of the high-plains at the time of writing.

Farmer Adoption

Directly this project reached the target number of producers (75) in the southwest region of Missouri. Indirectly the project has reached many more producers, researchers and industry people, making them aware that pasture-based dairy production is a profitable alternative to conventional dairy production. It is difficult to estimate the number of people reached, although the project Web site receives 30 visits per week.

Most of the farmers involved in the project see no other profitable way of dairying in the Ozarks. Based on the data collected in this trial several producers have been able to borrow to expand their operation at a time when conventional dairy producers are leaving the industry.

Producers practicing pasture-based dairy production need to spend time observing pastures and animals on a day-to-day basis. Compared to conventional dairy producers, pasture-based dairy producers require a higher level of management skill daily. For example, they have to make daily decisions on pasture allocation and during extreme weather conditions the comfort of the animals as well as the welfare of the pasture.

The area that producers need to do better is in production recording, both pasture and animal. Better decisions could be made with this information combined with good financial records.

Selected farmer testimonials can be found below.

Farmer Testimonials

“The grazing group has given us the opportunity to learn about experiences from older dairy farmers. Because of the valuable information collected from the group our farm was able to move from a shared operation in Fair Grove to owning our own 320-acre farm milking 125 to 150 cows. I feel I can call anyone in the grazing group and ask for help in any situation. Without this project we would not have had this opportunity, nor would we have our own farm. We have always learned something we can apply to our farm from every workshop attended. This experience has been invaluable and we need it to continue.”
Jeff Buckner

“When we started milking 36 and a half years ago we grazed everyday. We retired in April, 2001, due to health reasons. At our peak we milked 94 head and our high RHA was 19,000 pounds. In 1981 we cut back to 60 head and were more efficient. We supplemented the grazing with alfalfa we raised or bought out of Kansas. If the research on grazing had been available then it would have made us more profitable, and the dairies that went out of business might still be milking cows. The grazing group helps the young producers learn more from the older farmers and extension. Some years then were lean; however, we were able to hang on when other dairies with silos, concrete and free-stalls went out of business.”
Bill and Donna Crutcher

“The grazing project sponsored by University Extension has definitely increased our bottom line. Prior to this, grazing profitability was difficult and herd health was less than desired. Our knowledge of dairy cattle and the various forages available has increased because of the networking with other grazing dairies, the local dairy specialist and folks from agronomy campus. The collection of records of the many grazing dairies gave us the stimulus to buy a new farm and expand our cows from 90 to 225. These records gave critical information to our lender and helped him be more comfortable with our expansion.”
Charles Fletcher
KBC Dairy

“The grazing group has and does give us a platform to discuss “what-ifs” and share our experiences, good or bad, with those who are doing the same thing. We now know our cost of production and have shared that and a lot more information with others that without the group that opportunity just would not have been there. This is a fun way to dairy and the group reinforces this as a way of life that gives a bottom line and a positive spin on problem solving. It is very hard to maintain a social life and have interaction with the young start-ups. I wish this had been in place in 1973, but much better later than never. This group fills a void that is just not there in mainline dairy. We even have interaction with those who have experience from other countries–a very pleasant experience.”
John McArthur

“Because of my involvement with the University grazing project, I purchased a second farm consisting of 252 acres which is divided into 40 paddocks. I have rented an additional 80 acres, divided into 15 paddocks. In all, 240 acres are planted to ryegrass, orchardgrass, matua brome, alfalfa, white clover and chickory in a salad bar type mix. Currently two former employees have started their own dairies, which they plan to develop into grass-based dairies. This has been a result of their working on my grazing operation as well as their attending the monthly grazing workshops associated with the grazing project.”
Bernie VanDalfsen

Participation Summary

Educational & Outreach Activities

Participation Summary:

Education/outreach description:

Bishop-Hurley, G.J., S.A. Hamilton and R.L. Kallenbach (eds). 2000. Missouri Dairy Grazing Manual. MU publ. M168 (103 pages). Univ. Missouri Ext. Pubs., Columbia, MO.

Bishop-Hurley, G.J., Kallenbach, R.L., Roberts, C.A., Hamilton, S.A. (eds). 2002. Dairy Grazing Manual. MU publication. M168 (Revised). Univ. Missouri Ext. Pubs., Columbia, MO. 144 pp.

Davis, C.W., S.A. Hamilton, T.R.Rickard, G.J. Bishop-Hurley, B.J.Steevens and R.J.Crawford,Jr. 2002. Comparison of Bermudagrass and Caucasian Bluestem in a Dairy Grazing System. Thirty-Fifth Meeting American Society of Animal Science/American Dairy Science Association, Midwestern Sectional March 18-20, 2002 Des Moines, IA

Hamilton, S.A., T.R. Rickard, G.J. Bishop-Hurley and R. Young. 2001. Economics of Pasture-Based Dairies in Missouri. In Proc. American Forage and Grassland Council. 22-25 Apr. 2001. Springdale, AR. AFGC, Georgetown, TX. (Refereed).

Hamilton, S.A. T.R Rickard, R.L.Kallenbach, C.A.Roberts, G.J. Bishop-Hurley and B.J.Steevens. 2001. Enhancing the viability of Missouri dairy farms. Thirty-fourth Meeting American Society of Animal Science/American Dairy Science Association Midwestern Sectional March 19-21, 2001 Des Moines, IA.

Hamilton, S.A., T.R. Rickard, R.A.Crawford, R.D.Young, G.J. Bishop-Hurley, B.J.Steevens and C.W.Davis. 2001. University of Missouri Southwest Research Center Pasture-Based Seasonal. Thirty-fourth Meeting American Society of Animal Science/American Dairy Science Association Midwestern Sectional March 19-21, 2001 Des Moines, IA.

Rickard, T.R., S.A. Hamilton, C.A. Roberts, R.L Kallenbach, G.J.Bishop-Hurley. 2000. Enhancing the Profitability & Viability of SW Missouri Family Dairy Farms. North Central Small Farm Workshop, Springfield, IL

Rickard, T.R., Hamilton, S.A. 2002. Economics of a Missouri Pasture-based Dairy. Proceedings of the Heart of America Grazing Conference, January 24, 2002, Ina, IL

Please note, this list does not include presentations given at meetings for which there are no published proceedings etc.

Project Outcomes

Recommendations:

Areas needing additional study

The objective of this project was to get producers to use three management practices that would make dairying profitable. These were improved financial management (through improved record keeping and business plans), reducing the cost of production through the use of management-intensive grazing, and reducing the cost of complying with environmental regulations, particularly those involving waste management. Despite the efforts of those involved in this project, few producers have adopted a written business plan. This is an area that warrants further effort.

While not specifically part of the original proposal, it became evident that production (animal and pasture) recording is a very important activity in pasture-based dairying operations. When this became obvious, project leaders committed some time and effort to correcting this. Producers on pasture-based dairy farms make management decisions that require good pasture and animal performance information. This is an area which should have more emphasis in the future. For example, few producers use DHIA records to cull poor producing animals or can assess the quantity and quality of pasture they have to graze.

Data will need to be collected for several years to realize the impact the project had on the families involved, the community and the local economy. Many of the producers involved in the project are just now beginning to see the benefits. All those involved in the project will continue to practice pasture-based dairying, which appears to have a bright future. In the future, programs like this can help improve the chances of success for those wishing to enter the industry. Pasture-based dairying, with relatively low capital investment, provides an opportunity for people wishing to enter the dairy industry.

Our current program is the leading program of its kind in the lower Midwest. Producers and extension specialists in the surrounding states have seen the success of our pasture-based dairy program and are requesting similar programs for their states. Dairy specialists and program specialists from Arkansas and Tennessee took part in a discussion with representatives from Missouri by video link in August. At this meeting, they decided to investigate the possibility of implementing a multi-state project modeled on this project. A meeting was scheduled for January, 2003, to discuss fudning opportunities and how to set up programs in their states.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.