Archive for Retirement

10 RETIREMENT OPTIONS: Are you “IN”? Or Are you “OUT”?

When it comes to retirement from your current way of dairy farming, it is all about asking yourself what you want your life to be like. Do you want the next 30 years to go by, only to feel used up? If you’re over 50, you may be facing a new viewpoint on the dairying business that has provided your income, lifestyle, highs and lows for a few decades.  There are always choices.  Before you decide to simply do the obvious and retire, you might want to consider these 10 options when deciding if you’re “IN” or if you’re “OUT”.

1.     ARE YOU OUT?  No Dairy Heirs. or ARE YOU IN? Look to Science, Technology and Robots!

When there isn`t a family member willing to take over the dairy operation, many farmers decide it`s time to retire. But rather than jump too quickly, it is time to think realistically about some 21st Century options.  Moving forward in dairying means more targeted use of genetics, genomics, sexed semen and the scientific tools available to dairy breeders. Fewer cattle producing more milk gives you more of what you’re looking for. If you have simply accepted that you have non-family succession, broaden your thinking and consider robotics.  For less than the price of two new staff you can have robotic expertise … you may even get more production … faster payoff … and more time to broaden your non-farm lifestyle.  Have your farm and social life too! It’s never too soon to plan for farm succession. (Read more: Farm Succession: Which Exit Is Yours? And Farm Succession: Kicking the Hornet’s Nest?)

2.     ARE YOU OUT? Too much money to ignore.  or ARE YOU IN?  Nowhere to grow.

Referring back to number one, it’s like the three rules of successful real estate sales: Location. Location. Location.  As some farm areas are being swallowed up by cities, the potential to sell for development is a payday that’s simply too big to ignore. The same growth situation in other areas, results in rezoning and suddenly farms are locked in to current size and declining real estate value. If moving away from city proximity isn’t feasible at this time, perhaps you can turn your population access into a niche market.  Downsize to an agricultural tour farm, perhaps with a specialty farm store.  Target a demographic market in your area that is particularly happy to have specialized dairy products:  organic, ethnic, religious or philosophic. Becoming an agricultural Agvocacy farm might keep you with access to all the parts you like without the physical, mental or financial stresses that are so trying at this time of life. There are many examples of farms offering special dairy products and agro-tourism. Some such farmsteads offer wedding receptions or events such as farm fresh dairy breakfasts, a fall harvest festival or special school tours or popular children’s camps.

3.     ARE YOU OUT? Not profitable or ARE YOU IN? New potential profits.

Businesses that don’t produce profits don’t succeed. However, some dairy operations fail because they continue to operate too long without putting the brakes on rising expenses or too long without developing new revenue streams.  Where farms are susceptible to low milk prices or high feed prices, it may become impossible to repay financing.  In the end, that means no option but to get out.  If one spouse has been working off the farm, now there may be an opportunity to work together focusing on an alternative revenue stream. Perhaps now is the time to reel in those off-farm working costs and apply them to a niche revenue stream such as raising heifers, producing forages, managing dry cows or concentrating on grain production.

4.     ARE YOU OUT?  Too many restrictions. or ARE YOU IN?  Environmental Compliance.

How are modern environmental and food production regulations going to affect your operation in the future? And a long list of rules may also indicate a high level of politics. This is not the time to have to lead a crusade or fend off animal rights groups.  Compliance could be simple and profitable. Some operations have installed a state-of-the-art nutrient management plan. A machine separates solid and liquid cow manure. The solid non-smelly manure is used for cow bedding. The liquid is spread on the fields and used as an all-natural fertilizer. Bottom line, nothing goes to waste. Farms with this system have zero percent manure runoff and 100 percent of the manure is recycled.  Other innovations such as a solar energy system could increase energy efficiency while decreasing a farm’s carbon footprint and utility costs with the potential to provide power for other homes.

5.     ARE YOU OUT?  Inadequate feed. or ARE YOU IN? New supply options.

Climate changes also affect feed production and sourcing. Feeds, especially forages, may be in short supply and expensive for long periods of time.  As in 2002 and 2003, if forage supplies are scarce and expensive and milk prices are low, it might not be possible to access loans to purchase additional feed inventories to keep dairy cows in production.  In areas where “green belt” designations have been put into place, expansion of herd numbers—if at all possible with the current facilities – may still fall short in having access to hay, corn, grain etc. Simply taking on more debt or throwing money at the situation may not be the best alternative.

6.     ARE YOU OUT? Rising Input Costs or ARE YOU IN? Back end monetizing

It takes a lot of infrastructure to keep a sustainable dairy operation operating at the optimum level.  The days of doing it all are over.  Pick what you’re best at and then find the support team that makes continued dairy farming a realistic, sustainable and profitable decision. You may not be ready for the bridge party and bocce ball circuit. Therefore, at this point making changes that also positively impact your daily lifestyle is a good option to consider.  Are you located where large animal vets; nutrition support and equipment and machinery repair are accessible.  If the needed support structure is accessible and functioning perhaps it’s time to go for the dream.  Rather than wait for something beyond your control like politics , economics or even weather and Mother Nature to change for the better, this may be the opportunity to take on another piece of the supply chain such as processing your own specialty dairy products. Perhaps your expertise provides you with a special edge in sales (animals, products, supplies) and an on-farm store or auction is feasible.   For financing consider sources specializing in opportunities for agriculture. (Read more: Money Loves Agriculture. This Relationship is Brought to You By AgFunder.)

7.     ARE YOU OUT?  Too much work for one  or ARE YOU IN? Find a Golden Partnership

Is there someone out there, neighbour, friend or fellow farmer, who is happy doing the field and crop work? Are you happy in the barn?  Could you combine forces for a 20 year plan that fits both work strengths? A shared working relationship could provide lifestyle enhancements for both parties too? Do you know of someone else at the age of considering whether they need more or less quota or more or less cattle? These investments may run into the hundreds of thousands of dollars, yet the appreciation and resale value can be uncertain.  If quota isn’t the issue how big is the herd you can manage?

8.     ARE YOU OUT? Can’t wait to move on.  or ARE YOU IN? Become a Start-Up Mentor:

Who’s going to take care of your farm while you’re downsizing. What about finding a young family whose timeline could fit with yours?  While you downsize they have the opportunity to upsize. Make your years of experience available to those who are just starting out. You could enjoy helping young dairy farmers move their business forward. Here is an area where age need not hinder performance — age-related shortcomings are often outweighed by reliability, commitment and accumulated knowledge.

9.     ARE YOU OUT?  Not for your family.  Or ARE YOU IN?  Family loves dairying.

When labor is scarce and there is no time for the holidays and adventures that other people seem to enjoy frequently, the 24/7 dairy operator may decide it just isn’t worth it.  On the other hand, having the family all involved in the cycle of life benefits of dairy farming — being your own boss — the outdoors  — the physical  — may seem like the exact things that everyone else had to quit working a 9-5 job to enjoy. Remember a lot of the people who can’t wait for the retirement chair and the TV, spent much of their work lives complaining about the work, the people, the commute, the pay.  For most dairy farmers every day has been bracketed by the view of the horizon and in between each sunrise and sunset dairy folk felt passion for the hard work and the cows that provided their living.

10. ARE YOU OUT? Take the Cash and Run Or ARE YOU IN?  Keep the Farm. Cash in on the lifestyle

Selling out is not all cash in the bank from selling cattle, machinery and equipment. There are sale costs, including auction management and advertising. Vet costs for making sure that animals are healthy for sale time can have strong impact and add to those exit costs which can bring your hoped for margins down to break even.  Add in tax implications and you could find 20-40% of your “profits” eroded away. Supposing you are able to leave the farm with your nest egg intact, be sure you know what you’re going to do. If you’ve never enjoyed sitting on a beach, golfing or playing cards, then what makes you think that 20 years of retirement will win you over to these activities?  The sheer shock of spending close to 50% of your time doing something that you don’t really care about seems a pale way to end a career that has been built on daily interaction with family, friends and animals.

Bullvine Bottom Line:

Start having this conversation with yourself today.  It’s one of the most important things you can do. You owe it to yourself to live the life you know deep down you were meant to fulfill. Whether it’s out to pasture or greener pastures that are calling, there comes a time when you are looking over the gate to something new. Are you in? Or Are you out?






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