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Thread: Need advice

  1. #1

    Default Need advice

    I need some advice on trying to startup a dairy. I'm looking into getting 500 head to start the dairy. I found an older place that's for rent and would be perfect to start up. A clean facility. The problem is funding, I need advice on getting a loan or investors. Any tips would be helpful. Thanks for your time.


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  2. #2
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    Marry well......

  3. #3
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    Banks only lend about 65% so you will need the rest in cash. Also don't forget you will need rolling equipment too. So if you have that cash you will have to put together a budget to show the lenders. Marry well is also good advice.

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    What are your motives? What is your background?

    Why do you want to put 500 cows in an old rented facility? I'm sure it's clean, that's cuz it's empty.

    There are many more questions than answers here.

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    Quote Originally Posted by cousinit View Post
    What are your motives? What is your background?

    Why do you want to put 500 cows in an old rented facility? I'm sure it's clean, that's cuz it's empty.

    There are many more questions than answers here.
    Buying a place outright is out of the question for a new guy. If he's after 500 cows my guess is he's not a hipster from NYC.

    Old rented facilities are the place a new guy can grow. His 500 cows could be 1000 cows in 5 years, so he moves locations to a bigger rented facility.

    The biggest concerns for me would be forage, manure management, and raising replacements. If you can nail down costs and make it pencil out on conservative production and current cwt prices it might work.

    Personal opinions aside on expansions, i think for a young person starting out with a mind for growth, renting is the best option.

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    Quote Originally Posted by Ford 401 View Post
    Buying a place outright is out of the question for a new guy. If he's after 500 cows my guess is he's not a hipster from NYC.

    Old rented facilities are the place a new guy can grow. His 500 cows could be 1000 cows in 5 years, so he moves locations to a bigger rented facility.

    The biggest concerns for me would be forage, manure management, and raising replacements. If you can nail down costs and make it pencil out on conservative production and current cwt prices it might work.

    Personal opinions aside on expansions, i think for a young person starting out with a mind for growth, renting is the best option.
    It's probably abandoned for good reason. Why did the other guy abandon it? How long has it been sitting empty?

    We've rented before. I know some people think it's an option but seriously, guys, if you don't own your cows, what are you doing even thinking about it.

    We rented for 2 years. We owned our cows before renting. Then we bought a place. It was still very very hard sledding.
    Last edited by cousinit; 08-07-2017 at 12:48 PM.

  7. #7
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    Maybe not a hipster, but a dreamer non the less.

    Starting a 500 cow dairy in a rented facility is going to take some significant equity/cash. Pretty good bet that the op has neither if he's looking for advice on a message board. That's just the reality of it today.

  8. #8

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    And people say im nuts for wanting to milk 120! In all seriousness though, I think a lot more details are needed here to even begin to give decent advice. Is the OP a city kid that went on a field trip to a 500 cow dairy and said "hey, I want that", or is he currently a partner in a dairy and the partnership is being dissolved? What sort of farming background do you have, what part of the world are you in etc, is there family nearby that owns land for feed procurement and manure disposal? While i tend to think that the OP is not currently involved in dairy, i have been wrong before. I too would like to milk on my own in the next few years, but I am currently going through the phase where you find out how much equity it really takes to get started and i am only planning on 60-120.

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    Quote Originally Posted by Ford 401 View Post
    Buying a place outright is out of the question for a new guy. If he's after 500 cows my guess is he's not a hipster from NYC.

    Old rented facilities are the place a new guy can grow. His 500 cows could be 1000 cows in 5 years, so he moves locations to a bigger rented facility.

    The biggest concerns for me would be forage, manure management, and raising replacements. If you can nail down costs and make it pencil out on conservative production and current cwt prices it might work.

    Personal opinions aside on expansions, i think for a young person starting out with a mind for growth, renting is the best option.
    I agree with this .

    If you want to get into the industry from a standing start then renting a facility at the right price might be a good option .

    Spending some time running the numbers might be a good place to start . Also marrying well is a good idea ..
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

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    You guys thinking that this is a great idea, you didnt answer the OP's question. He wanted to know how to get funding. "Running the numbers" is a bit vague, but it's a start, I guess.

    I know I'd be all over this. It's gotta beat the 10% I'm getting in the stock market right now.
    Last edited by cousinit; 08-08-2017 at 07:52 AM.

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    You can look into FSA loans, although I dont think you can secure enough funding for 500 cows through them.

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    Quote Originally Posted by Ford 401 View Post
    Buying a place outright is out of the question for a new guy. If he's after 500 cows my guess is he's not a hipster from NYC.

    Old rented facilities are the place a new guy can grow. His 500 cows could be 1000 cows in 5 years, so he moves locations to a bigger rented facility.

    The biggest concerns for me would be forage, manure management, and raising replacements. If you can nail down costs and make it pencil out on conservative production and current cwt prices it might work.

    Personal opinions aside on expansions, i think for a young person starting out with a mind for growth, renting is the best option.
    Ford, from the OP's post, can I ask what makes you think his herd could magically double in size in 5 years?

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    The equity needed for a 500 cow rented dairy is still going to be massive. Figure a bare minimum of $1500 per cow (to buy) and $1500 per cow (to operate) the OP will need $500,000 in free equity before the banks are going to even start to talk to you. FSA will loan a higher percent, but they are not going to loan $1.5 million.

    Go work on large dairies and hoard your paychecks. Maybe get paid in cattle. I personally know someone who worked as a vet then plowed $300,000 cash into a brand new mega dairy, with investors providing the rest of the funds. Investors he had worked with on other dairies. He almost lost everything, but worked his ass off to make it work out in the end. Now he is a multimillionaire with his share. But you have to have skin in the game! Very very few are going to lend/invest to you if you aren't putting up a huge pile of your own cash.

    Personally, I would want $3000 in equity for each cow before starting the project, but I dislike debt.

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    I agree with 250, but I'm not sure it's very practical to believe you can save up that kind of money being a general laborer on a farm ....and still be young enough to handle starting up a dairy.....not without some kind of windfall anyway.

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    Quote Originally Posted by whistle pig View Post
    I agree with 250, but I'm not sure it's very practical to believe you can save up that kind of money being a general laborer on a farm ....and still be young enough to handle starting up a dairy.....not without some kind of windfall anyway.
    Right. In the labor thread we read that some guys get paid $8.50, and in this thread we read that you can get rich quick by milking someone else's cows.

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    go organic, build a go fund me page and get some folks to invest in you to soothe their souls.

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    Quote Originally Posted by whistle pig View Post
    I agree with 250, but I'm not sure it's very practical to believe you can save up that kind of money being a general laborer on a farm ....and still be young enough to handle starting up a dairy.....not without some kind of windfall anyway.
    $500K is pretty unlikely I will admit, but $100K is easily doable. I paid down debt or saved $10,000-15,000,year the 7 years after graduating that I was in the NE corner of WI (getting paid $10-$15/hour) That would put a new grad in their low to mid thirties when they started a dairy....making a lot of good financial decisions. The vet would have been ~45 when he bought in. Also, while I had minimal "high risk" investments, having $50K of saved equity earn another $1-5K of return per year takes another few months off the "dream timeline". Also, even if you don't marry rich, having a spouse that works and at least pays their own way is a major plus. Having a spouse actively contributing to fund the farm is even better.

    If someone wants to start up their own dairy (or any traditional business really) and gives up because they can't just borrow all the money and begin next week, they might want to rethink being a businessperson. However, I really do think it is possible to start your own dairy with no family support.

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    I think so too .

    As far as raising finance goes , there has to be a number of ways to skin that cat .

    We got into farm ownership through being property investors first and leveraging off some of our equity to buy cows during a major drought here back in the late 90's . We were only " share farming ". for the next three years before we purchased .

    i wouldn't recommend doing that but it's just what we did . I've read a lot of personal finance books and biographies of various entrepreneurs and recall the topic of raising finance being mentioned as more of an art than anything.
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  19. #19
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    Quote Originally Posted by cows250 View Post
    $500K is pretty unlikely I will admit, but $100K is easily doable. I paid down debt or saved $10,000-15,000,year the 7 years after graduating that I was in the NE corner of WI (getting paid $10-$15/hour) That would put a new grad in their low to mid thirties when they started a dairy....making a lot of good financial decisions. The vet would have been ~45 when he bought in. Also, while I had minimal "high risk" investments, having $50K of saved equity earn another $1-5K of return per year takes another few months off the "dream timeline". Also, even if you don't marry rich, having a spouse that works and at least pays their own way is a major plus. Having a spouse actively contributing to fund the farm is even better.

    If someone wants to start up their own dairy (or any traditional business really) and gives up because they can't just borrow all the money and begin next week, they might want to rethink being a businessperson. However, I really do think it is possible to start your own dairy with no family support.
    We did start our own dairy without any family support. I do not recommend it.

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    Quote Originally Posted by cousinit View Post
    We did start our own dairy without any family support. I do not recommend it.
    Why is that ?

    People are all different but I wouldn't want any of my family trying to "support " me . Would just be a recipe for a lot of unhappiness.
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

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