Many dairy farmers have pushed pause on expansion plans since the pandemic due to the many economic uncertainties facing agriculture. Last year’s surge in lumber prices put up caution flags and while the height of the pandemic is in the rearview mirror, farmers are still plagued with financial worries and wonder if now is the time to build or not.
In New York, 30 miles east of Buffalo, dairy producers Tyler and Kelly Reynolds of Reyncrest Farms say their current biggest challenge is the insecurity in the economy and the rising costs at every corner of their dairy—including building prices that impacts their business.
“I would say the biggest challenge is just the drastic rise in the cost of things,” Kelly says.
The Reynolds milk 1,450 cows and farm 2,700 acres alongside family. They are now building a new freestall barn, a project they have put off since 2020. Kelly share that the decision to postpone this building project was a combination of factors, including COVID-19, milk market uncertainties, and securing a builder.
“We are fortunate that our cooperative had allowed for growth,” Kelly says. “Some of our delays was also trying to decide what we wanted to build.”
Although the New York dairy family says the costs of doing business have left them with some sticker shock. For example, Reynolds budgeted $100,000 for running electricity to the barn based on their last building projects and now a similar job costs four times as much.
“It’s something everyone is dealing with,” Kelly says. “It just makes it difficult for future planning. Our milk price is great, we have a great labor force right now and are in growth mode. The economic uncertainty is difficult though.”
Ongoing Conversations
Don Mayer, district manager for the upper Midwest with DeLaval North America, says that construction costs are part of every project conversation they are having today, both with green sites and retrofits.
“Most of the customers that I am working with have been planning their projects for multiple years,” Mayer says. “As such, they have a plan that takes into account what the current costs and interest rates are, and it still works within their business plan. Of course, construction costs and interest rates are a regular topic of conversation.”
In South Dakota, Crosswind Jerseys built another 350-cow freestall barn last year. Located off the I-29 corridor, the Temperli family milks 1,850 cows.
Stefan Temperli is thankful they were able to lock in the price, pre-ordering the building and supplies before building costs skyrocketed a year ago.
“It is an all-steel building, so we didn’t have to worry about lumber,” Temperli reports.
Mayer says the first step of any type of expansion is with your milk buyer, ensuring you have a home for the added milk.
“I would suggest that a milk market, someone to sell their additional milk to, is a bigger challenge. I have customers who would build a new dairy now if they could sell the milk,” he says.
