Should beginning farmer policy be the same regardless of generational status?

By Rebecca Weir, graduate research assistant, and Joleen C. Hadrich

ation beginning farmers despite that they may be a third or fourth generation farmer.

Additionally, rst- and second-generation beginning dairy farmers differ by participation in:

In 2017, the average age of a U.S. farmer was 57.5 years which increased from 56.3 in 2012, according to the 2017 Census of Agriculture. In Minnesota, the average age was 56.5 in 2017 and 55 in 2012.

Only 26% of U.S. farms in 2017 had a beginning farmer as one of the operators. When we look at the estimates for dairy farms, the numbers are substantially lower. Nationally, less than 2% of farms with a beginning farmer are dairy farmers (10,556 of 597,377), and in Minnesota, the average is nearly 4% (611 of 16,132).

The positive point of these statistics is the fact that Minnesota has emphasized investing in beginning farmers through several programs managed by the Minnesota Department of Agriculture including the Beginning Farmer Tax Credit, Beginning Farmer Loan Program and a grant from the Rural Finance Authority to assist new farmers in purchasing farmland.

As you reect on how you started farming, we assume you did it in one of two ways. You started your farming operation independently or transitioned as the principal operator on an existing farm, whether that is a family member or not. But does it matter how beginning farmers enter the industry? Initially, one would say no, it should not matter, but as researchers, we wanted to see if there was a difference in nancial performance between these two groups.

Using FINBIN data from 1996 to 2021, we dened beginning farmers who started their operation as rst-generation beginning farmers, and beginning farmers taking over the principal operator role on an already existing farm were dened as second-gener-

Both types of beginning farmers are eligible for and have access to the same grants and loans offered at the state and federal levels. However, studies have indicated that rst-generation and second-generation beginning farmers have substantially different nancial performance. We wanted to see if this was true for Minnesota dairy farmers.

The rst nancial measure we studied was the farms’ ability to cover debt due in the next 12 months with liquid asset, which is the current ratio. First-generation beginning farmers had $2.80 available to cover each $1 of debt due in the next 12 months on their farm while second generation beginning farmers had $4.51. This suggests both groups have cash readily available to cover debt due in the next year. While the current ratio captures debt due in the short-run, solvency looks at the ability to cover all their debt both in the short- and long-run. We use the debt-to-asset ratio as our solvency measure, which shows that 62.1% of the rst-generation beginning farmers’ assets are owned by creditors. Second-generation beginning farmers are not leveraged as much with 46.7% of their assets owned by creditors.

Protability is the nancial measure often cited to indicate overall performance. The operating prot margin shows that for every dollar of revenue generated on the farm, 11.42 cents and 9.58 cents are retained as prot for rst-generation and secondgeneration beginning farmers, respectively. When we look at the rate of return on assets, rst-generation beginning farmers are generating a 7.81% return while second-generation beginning farmers have a 4.77% return on all investments on the farm. First-generation beginning farmers outperform second-generation beginning farmers in protability; however, the opposite is true for solvency and liquidity.

– Off-farm work: 71% of rst-generation farmers versus 56% of second-generation farmers.

– Number of operators: 1.2 operators versus 1.7 operators.

– Total assets: $746,110 versus $1,945,395.

– Milk yield: 19,063 pounds per cow versus 21,285 pounds per cow.

The biggest difference between these two groups is farm size. First-generation beginning farmers, on average, have 94 cows with 196 acres. Meanwhile, second-generation beginning farmers are larger, with 175 cows and 442 acres, on average.

Recognizing that many of these characteristics interact with each other, we studied the two groups individually, measuring the impact of herd size and acreage on a farm’s operating prot margin.

Both rst- and second-generation beginning farmers have a positive association with acres operated and protability, which means that regardless of generational status, if a beginning farmer increases their acreage, they can expect an increase in their operating prot margin. However, when analyzing herd size, we observe varying impacts. Increasing herd size negatively impacts the protability of rst-generation beginning farmers but positively impacts protability for second-generation beginning farmers.

As we continue to work on efforts to promote and encourage the next generation of farmers to enter the dairy industry, it is important to keep these statistics in mind during that transition. In particular, there is no one-size-ts-all strategy for farm success. However, identifying key characteristics, like having a strong land base or nding an established farm to transition, while utilizing grant programs with a focus on long-term asset purchases can ease entry into the profession.

“This program helps us manage better and make better decisions. It puts us a few extra steps ahead in preventing sickness and improving health. The system also monitors fertility 24/7 to help us catch cows in heat sooner. And when it comes to nutrition, we can manage each group accordingly and learn how cows are adapting.”

Making updates to facilities is also important to Schleif. The old commodity shed, which was replaced with a new model last year, is being transformed into a maternity area that will connect to a new transition/hospital area that is going to be constructed in the former maternity site. An expansion of the freestall barn will be required to enclose this section.

“This will allow us to monitor fresh cows a lot closer and gives us space for adding another 50 cows to the herd,” Schleif said.

Schleif suffered a setback last fall when a double infection kept him off the farm for three months. In 2019, he fell 15 feet out of a tree stand and broke his leg in four spots. As a result, he had two plates and 18 bolts put in his leg.

In October 2022, Schleif developed a staph infection when two of the bolts got loose and found their way into his joints. His leg swelled up to four times the normal size, and Schleif spent 2.5 weeks in the hospital. Doctors took all the metal parts out of his leg and put in a PICC line.

“They were constantly drawing blood and giving me IVs around the clock,” Schleif said. “It was very stressful, but I received excellent care.”

As Schleif nursed himself back to health, he knew the farm was in good hands under the care of the team he had in place.

“It was a sudden crash – like a big link had been taken out of the chain,” Schleif said. “Julio Roque is a big portion of our success. He took over for me when I was out and managed everything. We talked on the phone daily, but of course, it wasn’t the same as me being there.”

Schleif met Roque while working at Pine Breeze Dairy and said he learned a lot from Roque about the maternity area, fresh cow care and teamwork.

“I couldn’t ask for a better team member to work side by side with,” Schleif said.

The week of Thanksgiving, Schleif got another infection when Pseudomonas aeruginosa bacteria infested his PICC line, and he endured a second hospital stay of 1.5 weeks.

“This caused even more downtime and extended my recovery period,” Schleif said. “I was supposed to come back to the farm in December.”

Instead, Schleif did not return to the farm until Jan. 9.

“That’s a long time to be laid up,” he said. “But it could’ve been worse. It could’ve been my life. With the type of infections I had, I’m very lucky to be alive.”

Schleif had faith in his team and said they are the ones who kept things going during his prolonged illness.

“I couldn’t be more grateful for them,” he said. “What they did for me and each other is beyond words.”

Currently, Schleif is limited in what he can do on the farm. Therefore, he does calf chores, bookwork, computer work and supervises while he continues to heal.

“I’m not working with cows or equipment yet,” Schleif said. “That’s too high of a risk. But I had to get up and get moving. Being active is the best thing.”

Schleif does outpatient physical therapy twice a week. He walks with a cane and wears a boot on his right leg – both of which he said are temporary inconveniences.

“I need a lot of physical therapy to get my ankle moving in a good direction,” Schleif said. “I’m not going to get 100% out of it, but I’d like to at least be able to function properly, walk normal and have less pain. I only take pain medication as needed and live life the best I can.”

Schleif is picking up where he left off, pursuing his dreams of building up the herd he manages and drawing out the best it has to offer.

“As we continue making improvements and increasing efciencies, I’m setting a lot of goals for myself, the herd and the team,” Schleif said. “None of this would be possible without my team.”

Continuing to improve the genetics of the herd is a key goal.

“I’m always thinking about what we can do better to gain a couple extra pounds of milk or make the herd healthier,” Schleif said.

Growing the herd to 400 or 500 cows is also a goal of Schleif’s. Schleif is here to stay with aspirations that include becoming an owner.

“One day, I hope to be a partner in the farm,” he said.

As he looks to the future, Schleif is optimistic about all he hopes to accomplish with the herd he has been tasked with developing.

“This is a phenomenal herd already; the foundation is here,” Schleif said. “I just want to bring out its potential. I want nothing more than for the farm to be successful and have a bright future. I want it to have its moment to shine. To me, the sky is the limit.”

Eric Oakes Dakota, Illinois Stephenson County 90 cows

How did you get into farming? I worked on dairy farms growing up and then married a dairy farmer’s’ daughter. Shirley and I met while going to the University of Illinois. After graduation, we moved closer to her parents to help with the farm. We took over in 2011 when we purchased the buildings from her parents so they could retire.

What are your thoughts and concerns about the dairy industry for the next year? The positive milk price looks to soften a little this next year but should be protable with foreign supply disrupted. The domestic supply should be able to nd a home. Of course, the high input costs and low supply of certain products is always a concern.

What is a recent change you made on your farm and the reason for it? We recently replaced our sand-bedded cow stalls with Mayo Mats. We add straw on top. The cows are doing well on them, and the change has saved us time and money. Also, the straw makes a nice addition with the manure. It makes easier fertilizer application which has been a big advantage over sand bedding or corn stalk fodder. Everyone would agree that fertilizer prices have been high last year and this year.

Tell us about a skill you possess that makes dairy farming easier for you. I enjoy working with animals and try to notice all the differences in personalities. This not only helps when working among the cows but allows early recognition of heats and health problems. We