Editor’s Note: This is one article in a series that is included in the 2024 Farm Journal’s State of the Dairy Industry report. The full 16-page report will appear in the May/June issues of Dairy Herd Management and Milk Business Quarterly and will be published in this space over the next several weeks. To download the full report for free click here.
Georgia dairy farmer, Pete Gelber, who owns and operates Barrington Dairies in Montezuma,Ga., home to more than 13,500 cows, says as producers age, they must be willing to look in the mirror and ask tough questions, including what they want to happen to their farm and what’s in the best interest of all involved.
According to Shannon Ferrell, agricultural economics associate professor at Oklahoma State University, 88% of farmers and ranchers have no form of retirement plan.
“If you plan for another generation to come back to the farm, then you are going to have to determine how to financially support that,” he says. “Remember, if you choose not to do anything, that is a strategy that has a zero percent chance of working.”
With razor thin margins and an overall lackluster dairy market, it was not surprising when the majority of the respondents to our survey said they either lack succession planning or plan to maintain their current structure going forward. The overall concern as to how to pass the baton from one generation to the next is real, as 46% of respondents stated they do not have a succession plan or are unaware of the operations plans.
When you take a deeper dive, the larger-sized dairies tend to have a plan in place or are looking at succession planning. For dairies with 5,000+ cows, 42% of them say they have a plan in place, and 32% are in the stage of developing a plan. Findings are similar to dairies with 1,000 to 4,999 cows.
The small-sized dairies surveyed illustrated they are the least likely to have a plan in place, while dairies that plan to grow or expand are more likely to have a current structure plan in place.
The majority of respondents of all herd sizes said they plan to add a family member or bring a partner into their dairy in the next five years.
Even the most efficient and profitable herds need a transition plan from one generation to the next. Without it, they can disperse and become a statistic.
Succession plans don’t happen overnight. Begin conversation today about what your hopes are for the farm and work with a consultant on how to proceed forward with a plan to pass the farm onto the next generation or partner.
